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December 13, 2010 at 08:03 AM
Bill Gross (below) said earlier this year that "bonds have seen their best days," a view that was validated in November, according to Morningstar.
Bill Gross' PIMCO Total Return Fund, the largest taxable-bond fund in the country with $256 billion in assets, saw redemptions of $1.9 billion in November, according to preliminary Morningstar fund flow data. This was the fund's first month of net outflows in two years.
The Chicago-based research firm reports PIMCO Total Return wasn't alone. The Morningstar Intermediate-Term Bond Category, the category with the largest amount of inflows this year with more than $74 billion, had $154 million in outflows in November. Like PIMCO Total Return, this was the category's first month of net outflows in two years.
The rise in bond yields in recent weeks has led to sharp declines in bond funds. The 10-year Treasury note's yield increased to 2.81% from 2.63% in November.
PIMCO Total Return lost 1.5% in November alone, its worst month since September 2008. The Barclays Capital U.S. Aggregate Bond Index declined 0.57% in November.
