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Bill Gross Fund Takes in $364 Million During October and Today’s Other Top Stories

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Bill Gross’s new mutual fund at Janus Capital Group Inc. attracted $364 million in investor money during October, his first full month in charge, but the amount trails inflows into rival funds over the same period, according to data from research firm Morningstar Inc.

Octobers inflows mean the fund now has assets under management of $443 million after $66.4 million was added to the fund in September. Janus as a whole saw $1.1 billion in inflows across its mutual funds during October.

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While positive for Gross and his new paymasters, the funds competitors have fared much better in trying to attract the $50 billion or so from investors who abandoned Pimco following Gross’s exit.

The Metropolitan West Total Return Bond fund saw $6.7 billion in inflows in October, the most of any bond fund, and the Vanguard Total Bond Market Index fund saw $4.4 billion in inflows, according to Morningstar.

Morningstar said it doesn’t have benchmark information for the Janus Global Unconstrained Bond fund. According to a company fact sheet, the fund is comparing itself with Libor.

Between Oct. 6 and Nov. 6, Mr. Gross’s first full month at the helm of the fund, the Bank of America three-month U.S. Dollar Libor interest rate returned 0.022%, compared with 0.157% for Mr. Gross’s fund, according to Morningstar. The Barclays Aggregate U.S. Bond index, a standard measure for many bond funds, meanwhile, returned 0.422% during that time.

 

Todays Other Top Stories

Learn Bonds

Learn Bonds: – Dear Janet Yellen – Stocks are the cause of rising wealth disparity. – While financial pundits and politicians always seem to put a positive spin on the stock market’s role in society, in fact, it could be argued that stocks are among the leading causes of wealth disparity.  Basic math will help illustrate my point.

 

Municipal Bonds

Income Investing: – Detroit bankruptcy exit plan is bad for muni investors – Moody’s. – The two biggest rating agencies are taking pretty different views on the impact of Detroit’s bankruptcy exit plan that a judge just confirmed today.

Bloomberg: – Jerry Brown sets California on a course of public works. – Jerry Brown has nation-sized plans for California — if he can keep spending in check.

ETF Trends: – A precedent set in Stockton. – On the last day of October, the headline from Ignites blared: “$32M Haircut for Franklin in Stockton Bankruptcy.” Under the newly approved bankruptcy plan, bondholders will receive only approximately 1% in repayment for a $32 million loan to the city of Stockton in California.

Detroit Free Press: – For investors and travelers, it’s a whole new Detroit. – Outsiders are booking conventions, moving businesses downtown, buying bonds and looking to make money by investing in a city with projected growth that outpaces the rest of the U.S.

Bloomberg: – Detroit leaves legacy of tarnished pledge for muni bond buyers. – Detroit’s bankruptcy exit plan sets the city on a path to fiscal redemption. For the $3.7 trillion municipal market, its legacy may be the tarnishing of a pledge that bond investors have held sacrosanct for decades.

Bloomberg: – Hawaii sells as dollar rally raises tourists’ costs. – Hawaii plans to sell $1 billion of debt as Standard & Poor’s cites the risk that a rallying dollar will damp the enthusiasm of tourists who are visiting in record amounts and generate about 14 percent of the state’s economy.

Bizjournals: –  Western Massachusetts officials grappling with millions it would cost to expand broadband. –  Dozens of rural western Massachusetts towns without broadband would have to pony up millions to bring cable internet service to homes and businesses, then pay that borrowing back with user fees, officials explained at an informational meeting Thursday night.

 

Bond Market

Businessweek: – Who’s afraid of Fed raising rates? Not these bond buyers. – For all the talk that U.S. Treasuries will tumble once the Federal Reserve starts to raise interest rates, investors in the longest-dated debt securities are finding little cause for concern.

WSJ: – Bond Swings Draw Scrutiny. – (Subscription) The day’s trading was just hitting its stride in New York on the morning of Oct. 15 when bond investors, traders and strategists were stunned by an unusual move in the $12 trillion U.S. Treasury market playing out on their computer screens. Now, investors and regulators are burrowing into the causes of the plunge in yields to try to understand whether electronic trading and new regulations are fueling sudden price swings the market.

Bloomberg: – Hedge funds morph into bond dealers in post-crisis world. – Hedge funds are serving as the middleman in more bond trades as regulatory changes limit the amount of risky assets Canadian banks can hold on their books.

MuniNetGuide: – Lessons learned from Detroit’s bankruptcy. – Detroit is a wake-up call for others that there is never a good reason to defer funding of essential services and infrastructure at an acceptable level.  If you do, Detroit’s fate will be yours.

 

Treasury Bonds

Zacks: – 5 Top-rated government bond mutual funds to buy now. – 5 top rated government bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all government bond funds.

 

Investment Grade

FT: – Now is the time to look at corporate bonds and equities. – (Subscription) Is macroeconomic policy opening the door for income opportunities in Europe?

 

High Yield Bonds

InvestorPlace: – The Fed can’t mess with these 3 high-yield investments. – High-yield investments have been in fashion over the last few years mostly because the income potential elsewhere has just been miserable. But while interest-bearing assets like government and corporate bonds aren’t exactly high-yield investments, it’s worth noting that the returns have been pretty handsome in 2014 nonetheless.

FT: – Falling oil price hits junk energy bonds. – (Subscription) A sharp drop in energy bond prices has pushed yields to their highest level in more than one year, casting a shadow on the outlook for the broad US junk bond market and highlighting the risks to investors who flocked to the debt in recent years.

 

Emerging Markets

IFR Asia: – Frontier sovereigns eye Thai bonds. – Two of South-East Asia’s frontier nations are planning to offer their first international sovereign bonds in the Thai baht market after Thailand added Myanmar and Cambodia to its list of approved foreign issuers.

 

Investment Strategy

The 5 Funds: – Creating the perfect bond ETF portfolio. –  Ask any financial ‘expert’ and they will tell you to avoid bonds at all costs as rising rates will certainly hurt them. Yet, for most conservative and even moderate investors having some downside protection in the shape of bonds is vital for long term performance. This article discusses creating a bond portfolio using a few different bond ETFs that will help protect against a market decline and hedge against rising interest rates.

Chicago Tribune: – Investing: Pimco funds: Hold or fold? – By now, you’ve digested the news that bond guru Bill Gross has left Pimco, the firm he co-founded 43 years ago, to join Janus. But what does that mean for the money you have in Pimco funds? Should you stay or go?

 

Bond Funds

Valuewalk: – Is it premature to crown Gundlach “Bond King?” – When market environments change for bonds, and rates rise, this will be an environment to best separate the alpha from the beta among bond traders.

FT: – Fidelity faces questions over flagship funds. – (Subscription) Critics of nepotism were quick to scorn Abigail Johnson’s appointment last month as chief executive of Fidelity, the world’s third-largest independent fund house, with $2tn of assets. But taking the reins of the company from her 84-year-old father Ned is unlikely to be an easy transition for the publicity-shy executive.

Investment News: – Fixed-income firms scramble to capture funds unleashed by Pimco turmoil. – With interest rates near historic lows and signs pointing to a new Fed tightening cycle, the movement of money sparked by Gross’ exit from Pimco might be the start of a major bond transition.

Businessweek: – Western Asset caps expenses for core bond, core plus funds. – Legg Mason Inc. said its Western Asset Management bond unit set limits on expenses for clients on two of its main mutual funds, as fixed-income managers vie for billions of dollars leaving Pacific Investment Management Co. after Bill Gross’s exit.

Palisades Hudson: – A fire drill for bond funds. – The Securities and Exchange Commission has decided the recent volatile state of the market means it is time to give money managers a pop quiz.

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