To get the Best of the Bond Market delivered to your email daily click here.
PIMCO’s Total Return ETF (BOND) managed by the eponymous Bill Gross, has been toppled from its perch as the worlds largest actively managed ETF. The news would be of great embarrassment to Gross, were it not for the fact that it was replaced by another PIMCO ETF (MINT).
According to data compiled by IndexUniverse, PIMCO’s Total Return ETF (BOND), had assets under management (AUM) of $4.03 billion, on Sept. 3rd. Whilst PIMCO’s Enhanced Maturity Strategy Fund (MINT) had $4.15 billion AUM.
The move is symptomatic of the market as a whole, Gross has been saying for a while that investors should focus on short term maturities and avoid long term debt, especially long dated Treasuries.
BOND has led a charmed life since its launch in March 2012, becoming the second most successful ETF launch ever, but has suffered outflows in recent months as investors realign their portfolios for a high interest rate environment.
The news is testament to the prowess of Gross, that investors are not willing to abandon PIMCO altogether, they just move their hard earned cash from one PIMCO fund to another.
Todays Other Top Stories
Indexuniverse: – MINT Tops BOND As Biggest Active ETF. – The PIMCO Total Return ETF (BOND), with current assets of $4.03 billion, was surpassed on Sept. 3 by a fund in its own family, namely the PIMCO Enhanced Maturity Strategy Fund (MINT), a money-market proxy that currently has $4.15 billion in assets under management, according to data compiled by IndexUniverse.
ChartWatchers: – Bond yield very overbought. – We have been observing how, in spite of the Fed’s efforts, bond yields have been persistently rising, but now they have become very overbought.
Learn Bonds: – 6 Things to like about Treasuries. – In the world of investing, Treasuries are one of the most disrespected of all financial assets. I am frequently amazed by the plethora of financial pundits who will openly admit they can’t think of any reasons why investors should own Treasuries. Besides the important role that Treasuries play as collateral in the world’s financial system, they have other redeeming qualities as well. In no particular order, here are six things to like about Treasuries.
Learn Bonds: – Verizon bonds plunge following Vodafone deal. – Last week, Verizon Communications announced it would be acquiring the 45% stake that Vodafone holds in Verizon Wireless. The $130 billion deal’s consideration structure is mostly cash and stock, and it will increase Verizon’s debt by roughly $67 billion. No, that is not a typo. Verizon’s debt will increase by approximately $67 billion as a result of the deal, more than doubling the company’s debt load.
WSJ: – Bonds still belong in your nest egg. – The losses are starting to add up in the bond market, a core part of the nest egg for most retirees. While this development may be unnerving and calls for asking some smart questions, older savers should remember there are still good reasons to keep a hefty slug of their money in bond investments.
Morningstar: – Five compelling muni-bond funds. – So far the muni sell-off hasn’t been as dramatic as the previous time, but muni yields are well above those of comparable Treasuries, whereas historically they’ve traded at lower yields because of their tax benefits. With that in mind, here are some ways to bet on a rebound.
SSRN: – Low-risk anomalies in global fixed income. – we present the most compelling empirical evidence yet of a low-risk anomaly in fixed income markets. We show that portfolios invested in bonds with the lowest risk would have delivered the largest positive alpha and highest Sharpe ratios and portfolios invested in riskier bonds would have delivered the most negative alpha and lowest Sharpe ratios.
Global Macro Monitor: – If houses traded like bonds. – As the 10-year Treasury yield approaches 3 percent let’s take a look at the recent spike in mortgage rates and its micro impact on the housing market and average home buyer.
Daily Finance: – Why shorter-term bonds might not be your best bet. – The conventional wisdom in a rising interest rate environment is to seek out shorter-duration bonds. Although following that advice limits your potential capital losses from falling bond prices if rates do, in fact, rise, it doesn’t always give you the best total return over time.
Trustnet: – Equities still cheap, but bonds are expensive. – While some investors view rising yields as a potential buying opportunity for bonds and others are nervous about equity valuations following strong gains, Barclays’ Kevin Gardiner insists the smart money is still in risk-assets.
Bond Buyer: – Gallagher’s ‘blood oath’ to keep focus on munis. – Securities and Exchange Commission member Daniel Gallagher has sworn to take up the cause of municipal market reform at the SEC, accepting the baton from Elisse Walter, who recently left the commission.
Bloomberg: – Corporate debt costs decline before Verizon meets bond investors. – Corporate borrowing costs dropped from the highest in almost a year in Europe before Verizon Communications Inc. meets investors to arrange what may be the biggest bond sale in history.
Bloomberg: – Detroit slows Michigan sales to fewest in a decade. – The smallest amount of municipal-bond issuance in Michigan in 10 years is threatening to derail the state’s economic comeback, showing how Governor Rick Snyder underestimated the fallout from Detroit’s bankruptcy.
Morningstar: – The basics of income investing. – What is income investing and what routes to income are available to investors?
WSJ: – Cashing in bonds for college costs. – A reader asks. Can I gift the EE bonds to my adult child and have her use them to pay for her children’s college and avoid the income tax on the interest payments?
FT: – Banks set to launch Verizon’s $20bn bond roadshow. – Wall Street on Monday kicks off the roadshow for what could become the biggest corporate debt sale in history as it seeks buyers for Verizon’s blockbuster offering of some $20bn in bonds to help fund the $130bn acquisition of its wireless business.
Artemis: – Catastrophe bond market may hit $23 billion by end of 2016. – The catastrophe bond market, currently providing somewhere between $16 billion and $18 billion+ of protection dependent on who you ask, could see rapid growth over the next three years. GC Securities, the ILS and capital markets arm of broker Guy Carpenter, projects that it could reach as much as $23 billion by the end of 2016.
Income Investing: – A rare good week for munis, but Puerto Rico still plagued. – Citi muni strategists say that munis substantially outperformed Treasuries last week, with yields rising very modestly versus a substantial pullback in Treasuries. “This was surprising given the ongoing outflows from muni bond funds, with apparently no end in sight, and a severe acceleration of pressure on Puerto Rico bonds,” Citi writes. Citi credits a combination of strong direct retail demand, very light dealer inventory, and the prospect for very light new issue supply for the comparative gains.
RT @romyvarghese: Philly treasurer says the muni bond market is under "phenomenal stress."
— Brian Chappatta (@BChappatta) September 9, 2013
Demand test for #bonds this week. In addition to 10 & 30yr Trsy auctions, VZ expected to produce record US corporate bond sale of $20-25bln
— AnthonyValeri (@Anthony_Valeri) September 9, 2013