June Worst Month on Record for Bond Funds

Investors withdrew $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.

According to Morningstar’s report on mutual fund flows, long-term funds overall shed $47.3 billion, the largest monthly outflow since $105.6 billion in October 2008. Morningstar estimates net flows by computing the change in assets not explained by the performance of the fund.

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.

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 bond has come in third. International-equity and alternative funds had net inflows in June.

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 money market  and exchanged-traded funds (ETFs), in nearly 20 years. MFS topped all providers with inflows of $1.4 billion.

To view the complete report, visit http://www.global.morningstar.com/juneflows13. For more information about Morningstar Asset Flows, visit http://global.morningstar.com/assetflows.