Oct. 15, 2014, 3:25 PM
- U.S.-based mutual funds saw $4.6B in outflows from taxable bond funds for the week ended October 8, according to ICI. This was less than the $21B withdrawn - the largest amount since records began being kept in 2007 - in the few days immediately after Gross exited Pimco and its mammoth Total Return Fund.
- Of course, while investors mull where to put that money now that Gross is no longer at the helm, fixed-income has undergone a major rally - the Total Return Fund itself is up more than 1% since the start of October.
- ETFs: AGG, BOND, BND, SCHZ, LAG, SAGG, GBF, FBND, IUSB
Oct. 10, 2014, 2:46 PM
- More than $9B flowed into U.S.-listed fixed-income ETFs during the two weeks from Sept. 26-Oct. 8, with BlackRock's (BLK -1.2%) iShares capturing $6.2B of that money, according to the firm.
- The iShares Core U.S. Aggregate Bond Fund (AGG) had inflows of $1.59B (Vanguard's BND saw inflows of $1.68B), the iShares 1-3 Year Treasury Bond Fund (SHY) drew in $1.68B, and the iShares 7-10 Year Treasury Bond ETF (IEF +0.2%) had $640M of inflows.
- This isn't all Pimco related as unsteady equity markets have sent a wave of money into fixed income over the past few days.
Oct. 9, 2014, 1:31 PM
- The Fidelity Total Bond ETF (Pending:FBND), the Fidelity Limited Term Bond ETF (Pending:FLTB) and the Fidelity Corporate Bond ETF (Pending:FCOR), the first actively managed bond exchange-traded funds from Fidelity Investments, began trading this morning.
- Fidelity's timing could not have been better, with many investors, shaken by Bill Gross's departure from PIMCO, may be searching the market for new investment options.
- “I would say the timing of our launch is fortunate; however, this is part of a really well-thought-out long-term strategy around ETFs,” said Scott E. Couto, president of Fidelity Financial Advisor Solutions.
- Other total market ETFs: AGG, BOND, BND, SCHZ, LAG, SAGG, GBF, IUSB
- Other short term ETFs: BSV, ISTB, MINC
- Other corporate bond ETFs: LQD, CORP, CRED, QLTA, IGS, COBO, CBND, QLTB, IGU
Oct. 9, 2014, 9:23 AM
- “We’re nowhere close to reaching the limit in terms of ability to generate alpha,” says Scott Mather, one of the three managers taking the reins of Pimco's Total Return Fund (MUTF:PTTRX), (NYSEARCA:BOND) in wake of Bill Gross' departure. Whether it's possible to keep generating benchmark-beating returns with a $200B portfolio (it was once nearly $300B) is the debate of the day on Wall Street.
- Mather brushes off the idea of too big too succeed as does S&P Capital IQ's Todd Rosenbluth, who notes Total Return had a huge year in 2012 (beating the benchmark AGG by 600 basis points) when AUM was larger than it is today.
- Square 1 Financial's David Schawel disagrees, noting the fund's size excludes it from too many attractive segments of fixed income. Total Return's performance, he says, basically comes down to duration calls, and no one gets those right more than 50% of the time.
- He takes note of Dan Ivascyn's Pimco Income Fund (MUTF:PIMIX), (NYSE:PDI) - up an average of 12.8% over the last five years vs. the peer average of 7.2%. AUM were $300M in 2008 and $38.6B today. Ivascyn and his co-manager, says Schawel, play in lucrative areas of the bond market which Total Return isn't even allowed to participate in, and even if it could, the size wouldn't be enough to move its needle.
Oct. 3, 2014, 3:00 PM
- Bill Gross' move to Janus (JNS -2.1%) was enough to get Citi's William Katz to pull his Sell/Underweight rating, but he's not upgrading any higher than Neutral for now. Katz says Gross has requested just one trader to assist him, and notes no one from Pimco has joined him, suggesting one of Gross' edges - his ability to get more and better information than anyone else in fixed-income - is no longer there.
- Katz says the market has priced into Janus a $25B-$50B migration of assets, thus setting up for disappointment should AUM growth not reach those lofty levels.
- Bigger winners might be shops like DoubleLine, MetWest, and BlackRock (BLK +1%) - whose Aggregate Bond ETF (AGG -0.1%) broke its inflow record in the days following Gross' departure.
Oct. 1, 2014, 9:40 AM| Comment!
Sep. 30, 2014, 10:35 AM
- The Total Return ETF (NYSEARCA:BOND) - far smaller, but following a similar strategy to the Total Return Fund - saw $446.5M pulled on Friday following the announcement of Bill Gross' departure from Pimco. The redemption accounted for 12.5% of the fund's shares. Withdrawals slowed to $98M yesterday.
- It seems a good portion of those funds were placed for at least safekeeping BlackRock's (NYSE:BLK) iShares Core U.S. Aggregate Bond ETF (NYSEARCA:AGG), which saw more than $400M of inflows.
- What's Pimco selling? Traders say Pimco was seeking bids on more than $170M of agency-backed CMBS.
Sep. 19, 2014, 3:54 PM
- The Long Duration Total Return Bond Fund will have a dollar-weighted average effective duration of at least 10 years and will invest "in debt securities of any kind." Jeff Gundlach - who will be the fund's manager - has said he sees little amiss with interest rates at these low levels, and doesn't expect much of a rise from here.
- In addition to Treasurys, the fund's mandate allows for investments in MBS, CMOs, corporate debt (IG and HY), and overseas paper, among other instruments.
- Broad fixed income ETFs: AGG, BOND, BND, SCHZ, LAG, SAGG, GBF, IUSB
Sep. 2, 2014, 7:31 AM| Comment!
Aug. 1, 2014, 2:31 PM| Comment!
Jul. 29, 2014, 3:11 PM
- "The market is very complacent right now in terms of the valuations," says Matthew Eagan, co-manager of the Loomis Sayles Bond Fund. Along with co-managers Dan Fuss and Elaine Stokes, Eagan has doubled its short-term U.S. and Canadian debt holdings to 27% of AUM - a bet government bond rates are about to move higher.
- "The global economy is strong enough to support the Fed’s decision to continue the taper and eventually raise rates by the middle of 2015," says Eagan. "We want to be prepared for that to happen."
- Eagan's fund has outperformed 98% of its peers over the last five years.
- In today's action - as the FOMC is in day one of its 2-day meeting - the 10-year Treasury yield continues go its own way - off another three basis points to 2.46%. TLT +0.4%, TBT -0.8%
- ETFs: AGG, BOND, BND, SCHZ, LAG, SAGG, GBF, IUSB
Jul. 2, 2014, 10:44 AM
- Bill Gross had a hot hand in June, the Total Return Fund returning 0.37% vs. the benchmark Barclays Aggregate Bond Index return of 0.05%, but investors pulled another $4.5B from the Pimco flagship offering, cutting total AUM to $229B.
- The ETF equivalent BOND also outperformed the AGG during June, and is doing better by 120 basis points YTD.
- Pimco parent: Allianz (AZSEY) is lower by 7% YTD.
Jul. 1, 2014, 11:30 AM| Comment!
Jun. 12, 2014, 9:25 AM
- The quest for yield reaches a new level with London fast food outlet Chilango finding fast demand for its Burrito Bonds, which offer those who invest £10K a free burrito weekly for the life of the debt.
- The company is trying to raise £1M for expansion and hit 32% of its target goal two days after the bond opened. Other than the free lunch, the four-year paper has an 8% coupon.
- ETFs: AGG, BOND, BND, SCHZ, LAG, SAGG, DI, GBF, LDUR, FWDB
Jun. 10, 2014, 3:47 PM
- It may not be the top for fixed-income, but "Bond Market Shortfall of $460B Seen Boosting Debt Markets" is the sort of headline you won't see at the bottom. The article from Bloomberg takes note of a JPMorgan analysis expecting debt issued this year to fall $600M from 2013 to $1.8T, while demand increases to $2.26T.
- Globally, bonds have returned 3.7% YTD, their best start to the year since 2003, according to the BAML Global Broad Market Index.
- "Everybody was expecting supply to come down, but maybe it’s coming down sooner” than anticipated, says SEI Investment's Sean Simko. “There’s a shift in sentiment from the beginning of the year when everyone expected rates to move higher.”
- ETFs: AGG, BOND, BND, SCHZ, LAG, SAGG, DI, GBF, RIGS, LDUR, FWDB
Jun. 10, 2014, 12:43 PM
- Introduced in October 2012, the iShares core lineup will double in size on June 12th with the addition of 10 new and existing iShares funds.
- Four new ETFs will roll out on Thursday to join the core lineup: iShares Core Dividend Growth ETF (DGRO), iShares Core MSCI Europe ETF (IEUR), iShares Core MSCI Pacific ETF (IPAC) and iShares Core GNMA Bond ETF (IUSB).
- Six of the funds are existing and will undergo name and some will also see ticker changes: iShares Russell 3000 Growth ETF (IWZ) will become iShares Core U.S. Growth ETF under the ticker IUSG; iShares Russell 3000 Value ETF (IWW) will become iShares Core U.S. Value ETF under the ticker IUSV; iShares High Dividend ETF (HDV) will become iShares Core High Dividend ETF and continue to trade under HDV; iShares Credit Bond ETF (CFT) will become iShares Core U.S. Credit Bond ETF under the ticker CRED; iShares U.S. Treasury Bond ETF (GOVT) will become iShares Core U.S. Treasury Bond ETF and continue to trade under GOVT; iShares Barclays GNMA Bond ETF (GNMA) will become iShares Core GNMA Bond ETF and continue to trade under GNMA.
- The original core iShares ETFs these funds will join: ITOT, IVV, IJH, IJR, IXUS, IEMG, IEFA, AGG, ILTB, ISTB
AGG vs. ETF Alternatives
The iShares Core Total U.S. Bond Market ETF (the “Fund”) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays U.S. Aggregate Bond Index.
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