Making a tough 2013 even worse for bond funds is tax-loss selling. "There's not a whole lot of other losses out there," explains Tim Courtney, taking note of the approximate 25% gain the broad stock market.
"Every year we see investors running from bad performance when they set their new asset allocations," says S&P CapitalIQ's Todd Rosenbluth. "Investors want their money to work for them, and bond funds certainly haven't been delivering like they used to."
Previous: Investors are cutting fixed income allocations and upping equity at what may be exactly the wrong time.