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Bond Bubble showing Cracks as Outflows seen in Bond Markets

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December 09, 2010 – Comments (2)

PIMCO Total Return Sees Outflows for a Change

Bill Gross'  PIMCO Total Return displayPTip('PTTRX', 'PTTRX','YTD', '', '', '', '', '', '','msg','P');(PTTRX


Sponsored by:
PTTRX), 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.

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 $80 billion, had $154 billion in outflows in November. Like PIMCO Total Return, this was the category's first month of net outflows in two years.

Gross said earlier this year that "bonds have seen their best days," and investors may be finally taking Gross' proclamation to heart. 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.

The fund's advisor, PIMCO, still took in $1.1 billion for the month, thanks in part to the continued popularity of  PIMCO Unconstrained Bond (PFIUXSnapshot | Total Returns | Analyst Research Morningstar Rating:Not RatedSponsored by:PFIUX), which absorbed $700 million.  PIMCO Commodity Real Return Strategy ;(PCRIX
Sponsored by:
PCRIX) fared even better with $800 million in inflows.

2 Comments – Post Your Own

#1) On December 09, 2010 at 4:07 PM, jesusfreakinco (28.98) wrote:

Added to short TLT position today.  Hopefully it is a good move...  Anyone else out there thinking the Fed has lost control of the bond market?

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#2) On December 09, 2010 at 4:10 PM, starbucks4ever (94.15) wrote:

Actually, TLT is a buy.

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