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June Long-Term Fund Outflows Worst Since 2008: Morningstar

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Generalissimo Francisco Franco is still dead, and June was still a dismal month for bond fund and bond ETF flows.

Morningstar confirmed on Friday previously reported figures that found investors withdrew an estimated $43.8 billion from taxable-bond funds and $16.4 billion from municipal-bond funds, making June the worst month on record for bond funds in terms of total outflows.

Long-term funds overall shed $47.3 billion, the largest monthly outflow since $105.6 billion in October 2008. The Chicago-based research and reporting firm estimates net flows by computing the change in assets not explained by the performance of the fund.

Morningstar specifically noted that intermediate-term bond funds lost $24.4 billion in June, dragged down by outflows of $9.6 billion from PIMCO Total Return. DoubleLine Total Return saw redemptions of $1.2 billion, its first monthly outflow. Other weak-performing bond categories included long government, emerging-markets bond, and inflation-protected bond.

During the first week of July, however, investors changed their tune on where central-bank policymaking is heading and poured nearly $6 billion into equity funds and over $2 billion into bond funds, according to the EPFR Global.

Additional highlights (or lowlights, depending on one’s point of view) from Morningstar’s report include:

  • Not all fixed-income categories suffered in June and the year-to-date period. Bank-loan funds have collected more assets than any other category in 2013, and nontraditional bonds have come in third.
  • International-equity and alternative funds had net inflows in June. Among international-equity funds, Oakmark International, which has a Morningstar analyst rating of Gold, continued its string of strong inflows, collecting $753 million. The fund has doubled in size in the last year, absorbing nearly $5 billion and achieving a 35% return year to date.
  • At the firm level, PIMCO led outflows, with redemptions of $14.5 billion, followed by Fidelity with $5.1 billion. Vanguard saw its first firm-level outflows (including exchanged-traded and money-market funds) in nearly 20 years. MFS topped all providers with inflows of $1.4 billion.

Check out Gold Gets Blamed for Record Commodity ETP Outflows.


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