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Bond funds lose $30.3B in August

  • "These outflows mark an enormous shift for the bond world," says TrimTabs, which gathered the data. "A vicious circle of losses and redemptions as the bond binge unwinds could get nasty ... Lulled into complacency by a 30-year bull market, many investors probably did not understand the risks ... Now they seem to be reacting very quickly to losses."
  • The withdrawals this month are the 3rd highest on record - June 2013 and October 2008 are #1 and #2 - and the month isn't even over yet. Bond funds YTD have seen $4B in redemptions, putting them on pace for their worst year since 2004's $7B loss. This comes against $1.2T of inflows from 2009-2012.
  • It's estimated Pimco saw $7.4B in redemptions in August as Bill Gross' giant Total Return Fund (ETF version: BOND) has lost 3.6% YTD. Some Pimco closed-end funds having a rough run (with a couple now trading at rare discounts to NAV): PHK, PTY, PDI.
  • DoubleLine is estimated to have lost $631M, but Jeff Gundlach's Total Return Fund has fallen just 1.1% YTD - better than 86% of its rivals. The DBL now trades at a discount to NAV.
  • Broad bond ETFs: AGG, BND, LAG, SCHZ, BOND, SAGG, MINC.
Comments (5)
  • Grant Dossetto
    , contributor
    Comments (135) | Send Message
     
    Buy when there is blood in the streets.
    22 Aug 2013, 07:41 AM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    Yep, a little more blood, then get into bonds for a short term trade. Then watch for the Taper to magically disappear and bond rates fall.
    22 Aug 2013, 08:19 AM Reply Like
  • The_Hammer
    , contributor
    Comments (3775) | Send Message
     
    Gundlach is damn great manager. The buy the dips crowd is going to get sucked in as we are probably at a major oversold position then lull those it is great time to buy. Then bond market will suck in as many as possible then torch them again as rates head higher.
    Just wait 'til inflation numbers cannot be manipulated away then all hell breaks loose. Bad news as Sovereign Interest expense rockets higher.
    22 Aug 2013, 09:17 AM Reply Like
  • michael123890124980
    , contributor
    Comments (2) | Send Message
     
    I've read this comment three times and still don't understand it.
    22 Aug 2013, 11:15 AM Reply Like
  • allan37
    , contributor
    Comment (1) | Send Message
     
    Given that in the days before bond ETFs were 'invented' a bond was an instrument that matured after a known period of time and was structurally different to an equity - finance 101 you might say, and with non-zero interest rates they paid a reasonable coupon as well.

     

    All this talk of a 30 bull market sound like Bill Gross talking up his book for most of that time. Since 2008 short term rates have been close to zero and now there is the possibility that the Fed will no longer be buying $85bn of bonds per month is all one needs to know. This is more of a 4 year story rather than a 30 year story.
    24 Aug 2013, 02:46 PM Reply Like
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