BOND’s Lost Assets Go To ETF Mainstays

In the fast-moving world of ETFs, Gross’ exit has hurt BOND, but helped its biggest competitors.

ETF.com
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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

In the fast-moving world of ETFs, Gross’ exit has hurt BOND, but helped its biggest competitors.

The PIMCO Total Return ETF (BOND | B), managed until recently by Bill Gross, has lost money on virtually every day since his Sept. 26 departure, totaling about $880 million, or about 25 percent of its assets. Worse yet, the ETF Gross ran has lost much of those assets to the very competing funds he belittled during the early glory days of BOND in 2012.

Investors yanked almost $220 million out of BOND in the past week ended Thursday, Oct. 9—which comes on top of $662 million in redemptions in the prior weekly period, according to data compiled by ETF.com Analytics. BOND now has $2.7 billion in assets—down from about $3.5 billion on the day Gross suddenly resigned from the Newport Beach, California-based company he founded 25 years ago.

On the flip side, the ETF market’s two biggest broad indexed bond funds, the $20 billion-plus iShares Core U.S. Aggregate Bond ETF (AGG | A-97) and the $24 billion Vanguard Total Bond Market ETF (BND | A-93), have been raking in assets over the same period. AGG added $426 million in the past week, while BND added $732 million. In the prior week, inflows into each of the ETFs totaled more than $1 billion.

To be sure, investor nervousness has contributed to the inflows, but on some days in the past two weeks, the flows out of BOND came suspiciously close to matching the combined inflows into Vanguard’s BND and iShares’ AGG.

Total ETF assets edged lower to $1.836 trillion in the past week, as the S&P 500 Index’s drop of nearly 1 percent offset net ETF inflows of almost $4.6 billion.

Interchangeable?

Moreover, notwithstanding the actively managed BOND’s capability to own non-U.S. bonds, the PIMCO ETF still plays a similar role that domestic core bond funds such as BND or AGG play in an investment portfolio.

Gross made that abundantly clear in September 2012, when he implored advisors to dump their positions in BND or AGG and invest in BOND, the new ETF version of the $220 billion PIMCO Total Return Fund (PTTRX) he also managed until the day he left PIMCO.

“If you have clients in BND or AGG, get them over [to BOND],” Gross told an audience of financial advisors at ETF.com’s Inside Fixed Income conference. “I don’t care about the fees. Just bring them over because you’ll be helping them out. I can’t guarantee it … but I think it’s a pretty good bet,” he said, dismissing the significance of BOND’s price tag, which is higher than either BND’s or AGG’s.

BOND has an annual expense ratio of 55 basis points, or $55 for each $10,000 invested, compared with the 8-basis-point expense ratios on both BND and AGG.

PIMCO Soap Opera

Gross resigned unexpectedly on Friday, Sept. 26, after months of rancor at PIMCO, the world’s largest bond fund manager. He was reportedly about to be fired, according to several media reports. His behavior had been erratic in recent months in the wake of the sudden departure early this year of his heir apparent Mohammed El-Erian, according to a number of published reports.

As noted, Gross was, until Thursday, Sept. 25, the manager of BOND as well as its mutual fund version, the PIMCO Total Return Fund (PTTRX). The mutual fund is the biggest fixed-income mutual fund in the world. BOND remains the second-biggest actively managed ETF after the nearly $3.9 billion PIMCO Enhanced Short Maturity Strategy Fund (MINT | B).

PIMCO, a firm with about $2 trillion in assets under management, has suffered total redemptions in the tens of billions since Gross left. The firm itself estimates outflows related to Gross’ departure could total $100 billion when all is said and done, and some on Wall Street estimate that figure could reach as high as $200 billion.

Gross immediately joined Janus Capital Group. He will run a new and small unconstrained bond fund. In a briefing yesterday, Gross spoke to analysts about the promise of unconstrained bond funds in the current environment.

Gross will remain in Newport Beach and won’t relocate to Denver, where Janus is based.

Top 10 Creations (All ETFs)

TickerNameNet Flows ($,mm)AUM ($, mm)AUM % Change
IVViShares Core S&P 500885.6362,183.581.44%
BNDVanguard Total Bond Market731.6924,042.533.14%
HYGiShares iBoxx $ High Yield Corporate Bond577.4713,449.034.49%
TLTiShares 20+ Year Treasury Bond436.934,597.2610.50%
AGGiShares Core U.S. Aggregate Bond426.3020,221.542.15%
XLFFinancial Select SPDR376.2018,483.402.08%
IEFiShares 7-10 Year Treasury Bond356.015,678.886.69%
LQDiShares iBoxx $ Investment Grade Corporate Bond345.4317,887.621.97%
SHYiShares 1-3 Year Treasury Bond330.1610,171.273.35%
XLPConsumer Staples Select SPDR330.007,929.494.34%

Top 10 Redemptions (All ETFs)

TickerNameNet Flows ($,mm)AUM ($, mm)AUM % Change
QQQPowerShares QQQ-1,001.2639,642.95-2.46%
EEMiShares MSCI Emerging Markets-805.6637,107.77-2.13%
IWMiShares Russell 2000-591.9321,564.03-2.67%
EWUiShares MSCI United Kingdom-444.753,426.93-11.49%
FXHFirst Trust Health Care AlphaDEX-310.392,392.49-11.48%
EWZiShares MSCI Brazil Capped-293.275,305.52-5.24%
VGKVanguard FTSE Europe-263.1013,144.48-1.96%
MDYSPDR S&P MidCap 400-221.3513,171.72-1.65%
BONDPIMCO Total Return-218.582,706.20-7.47%
GLDSPDR Gold-210.6230,041.87-0.70%

ETF Weekly Flows By Asset Class

 Net Flows ($, mm)AUM ($, mm)% of AUM
U.S. Equity 2,108.361,002,796.280.21%
International Equity -1,683.42427,970.97-0.39%
U.S. Fixed Income 4,462.82269,078.141.66%
International Fixed Income -324.2823,857.84-1.36%
Commodities-187.2460,740.68-0.31%
Currency0.061,599.240.00%
Leveraged238.6320,934.511.14%
Inverse-7.9321,104.88-0.04%
Asset Allocation26.045,257.420.50%
Alternatives-42.693,317.76-1.29%
Total:4,590.361,836,657.720.25%

 


Top 10 Volume Surprises, Funds >$50 mm AUM

TickerNameAverage Volume
(30 Day)
1 Week Average
Volume
% of Average
SNLNHighland/iBoxx Senior Loan257,9986,116,850474.18%
PKBPowerShares Dynamic Building & Construction77,8801,836,512471.63%
PTHPowerShares DWA Healthcare Momentum27,250584,219428.78%
GRICohen & Steers Global Realty Majors12,283260,390423.97%
FNDFSchwab Fundamental International Large Company46,197729,461315.80%
GSYGuggenheim Enhanced Short Duration Bond289,4964,521,662312.38%
CUTGuggenheim Timber33,960522,180307.53%
BSJJGuggenheim BulletShares 2019 High Yield Corporate Bond60,299924,048306.49%
FNIFirst Trust ISE Chindia53,133800,761301.42%
EPSWisdomTree Earnings 5008,084120,400297.89%

Top 10 Weekly Performers, Excluding Leverage/Inverse Funds and <1,000 Shares Traded

TickerNameWeekly PerformanceWeekly VolumeAUM ($, mm)
EEHELEMENTS Linked to SPECTRUM Large Cap U.S. Momentum ETN31.29%12,8211.93
BRAFGlobal X Brazil Financials11.41%4,5092.92
EWZiShares MSCI Brazil Capped10.71%205,648,5055,305.52
BRAQGlobal X Brazil Consumer10.12%25,73010.26
FBZFirst Trust Brazil AlphaDex9.25%16,5014.76
BRFMarket Vectors Brazil Small-Cap8.47%251,814134.95
JJSiPath Dow Jones-UBS Softs Total Return ETN8.37%4,2953.80
FUEELEMENTS MLCX Biofuels Total Return ETN7.92%26,8650.93
EWZSiShares MSCI Brazil Small-Cap7.77%110,67235.31
JOiPath Dow Jones-UBS Coffee Total Return ETN7.57%777,273103.99

Bottom 10 Weekly Performers, Excluding Leverage/Inverse Funds and <1,000 Shares Traded

TickerNameWeekly PerformanceWeekly VolumeAUM ($, mm)
FCGFirst Trust ISE-Revere Natural Gas-10.53%3,371,233340.74
XOPSPDR S&P Oil & Gas Exploration & Production-9.06%69,212,8871,166.11
PBWPowerShares WilderHill Clean Energy-8.71%1,167,234157.34
PSCEPowerShares S&P SmallCap Energy-8.64%64,91229.98
TANGuggenheim Solar-8.23%1,652,709353.20
PXIPowerShares DWA Energy Momentum-7.80%396,494214.35
XMESPDR S&P Metals and Mining-7.46%18,844,501471.68
FRAKMarket Vectors Unconventional Oil & Gas-7.41%355,59278.16
QCLNFirst Trust NASDAQ Clean Edge Green Energy-7.34%484,536113.38
OILiPath S&P GSCI Crude Oil Total Return ETN-7.18%1,755,567187.26

Top 10 YTD Performers

TickerNameYTD PerformanceWeekly PerformanceAUM ($, mm)
EEHELEMENTS Linked to SPECTRUM Large Cap U.S. Momentum ETN150.8631.291.93
JOiPath Dow Jones-UBS Coffee Total Return ETN95.167.57103.99
CAFEiPath Pure Beta Coffee ETN87.086.778.50
AGAPowerShares DB Agriculture Double Short ETN79.45-11.282.55
DDPPowerShares DB Commodity Short ETN75.496.092.56
TMFDirexion Daily 20 Year Plus Treasury Bull 3x64.364.1953.73
INDLDirexion Daily India Bull 3X62.790.6174.34
LBNDPowerShares DB 3X Long 25+ Year Treasury Bond ETN58.293.0432.79
ITLTPowerShares DB 3X Italian Treasury Bond Futures ETN54.52-0.5023.16
DRNDirexion Daily Real Estate Bull 3x51.036.7485.80

Bottom 10 YTD Performers

TickerNameYTD PerformanceWeekly PerformanceAUM ($, mm)
JDSTDirexion Daily Junior Gold Miners Bear 3X-74.69-7.6743.62
RUSLDirexion Daily Russia Bull 3X-67.13-7.28147.39
CVOLC-Tracks Citi Volatility ETN-58.53-0.705.64
GASLDirexion Daily Natural Gas Related Bull 3X Shares-56.78-29.6618.89
TVIXVelocityShares Daily 2X VIX Short Term ETN-55.331.21272.97
UVXYProShares Ultra VIX Short-Term Futures-54.400.92280.44
DGAZVelocityShares 3X Inverse Natural Gas ETN-51.586.20203.26
TMVDirexion Daily 20 Year Plus Treasury Bear 3x-45.66-4.38553.84
TTTProShares UltraPro Short 20+ Year Treasury-45.02-4.31110.42
SBNDPowerShares DB 3X Short 25+ Year Treasury Bond ETN-42.22-3.9453.04

Disclaimer: All data as of 6 a.m. Eastern time the date the article is published. Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.

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