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.
In the fast-moving world of ETFs, Gross’ exit has hurt BOND, but helped its biggest competitors.
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 $200 billion.
Gross immediately joined Janus Capital Group. He will run a new and small unconstrained bond fund. In a briefing yesterday, Gross spoke to analysts about the promise of unconstrained bond funds in the current environment.
Gross will remain in Newport Beach and won’t relocate to Denver, where Janus is based.
Top 10 Creations (All ETFs)
Ticker | Name | Net Flows ($,mm) | AUM ($, mm) | AUM % Change |
IVV | iShares Core S&P 500 | 885.63 | 62,183.58 | 1.44% |
BND | Vanguard Total Bond Market | 731.69 | 24,042.53 | 3.14% |
HYG | iShares iBoxx $ High Yield Corporate Bond | 577.47 | 13,449.03 | 4.49% |
TLT | iShares 20+ Year Treasury Bond | 436.93 | 4,597.26 | 10.50% |
AGG | iShares Core U.S. Aggregate Bond | 426.30 | 20,221.54 | 2.15% |
XLF | Financial Select SPDR | 376.20 | 18,483.40 | 2.08% |
IEF | iShares 7-10 Year Treasury Bond | 356.01 | 5,678.88 | 6.69% |
LQD | iShares iBoxx $ Investment Grade Corporate Bond | 345.43 | 17,887.62 | 1.97% |
SHY | iShares 1-3 Year Treasury Bond | 330.16 | 10,171.27 | 3.35% |
XLP | Consumer Staples Select SPDR | 330.00 | 7,929.49 | 4.34% |
Top 10 Redemptions (All ETFs)
Ticker | Name | Net Flows ($,mm) | AUM ($, mm) | AUM % Change |
QQQ | PowerShares QQQ | -1,001.26 | 39,642.95 | -2.46% |
EEM | iShares MSCI Emerging Markets | -805.66 | 37,107.77 | -2.13% |
IWM | iShares Russell 2000 | -591.93 | 21,564.03 | -2.67% |
EWU | iShares MSCI United Kingdom | -444.75 | 3,426.93 | -11.49% |
FXH | First Trust Health Care AlphaDEX | -310.39 | 2,392.49 | -11.48% |
EWZ | iShares MSCI Brazil Capped | -293.27 | 5,305.52 | -5.24% |
VGK | Vanguard FTSE Europe | -263.10 | 13,144.48 | -1.96% |
MDY | SPDR S&P MidCap 400 | -221.35 | 13,171.72 | -1.65% |
BOND | PIMCO Total Return | -218.58 | 2,706.20 | -7.47% |
GLD | SPDR Gold | -210.62 | 30,041.87 | -0.70% |
ETF Weekly Flows By Asset Class
Net Flows ($, mm) | AUM ($, mm) | % of AUM | |
U.S. Equity | 2,108.36 | 1,002,796.28 | 0.21% |
International Equity | -1,683.42 | 427,970.97 | -0.39% |
U.S. Fixed Income | 4,462.82 | 269,078.14 | 1.66% |
International Fixed Income | -324.28 | 23,857.84 | -1.36% |
Commodities | -187.24 | 60,740.68 | -0.31% |
Currency | 0.06 | 1,599.24 | 0.00% |
Leveraged | 238.63 | 20,934.51 | 1.14% |
Inverse | -7.93 | 21,104.88 | -0.04% |
Asset Allocation | 26.04 | 5,257.42 | 0.50% |
Alternatives | -42.69 | 3,317.76 | -1.29% |
Total: | 4,590.36 | 1,836,657.72 | 0.25% |
Top 10 Volume Surprises, Funds >$50 mm AUM
Ticker | Name | Average Volume (30 Day) | 1 Week Average Volume | % of Average |
SNLN | Highland/iBoxx Senior Loan | 257,998 | 6,116,850 | 474.18% |
PKB | PowerShares Dynamic Building & Construction | 77,880 | 1,836,512 | 471.63% |
PTH | PowerShares DWA Healthcare Momentum | 27,250 | 584,219 | 428.78% |
GRI | Cohen & Steers Global Realty Majors | 12,283 | 260,390 | 423.97% |
FNDF | Schwab Fundamental International Large Company | 46,197 | 729,461 | 315.80% |
GSY | Guggenheim Enhanced Short Duration Bond | 289,496 | 4,521,662 | 312.38% |
CUT | Guggenheim Timber | 33,960 | 522,180 | 307.53% |
BSJJ | Guggenheim BulletShares 2019 High Yield Corporate Bond | 60,299 | 924,048 | 306.49% |
FNI | First Trust ISE Chindia | 53,133 | 800,761 | 301.42% |
EPS | WisdomTree Earnings 500 | 8,084 | 120,400 | 297.89% |
Top 10 Weekly Performers, Excluding Leverage/Inverse Funds and <1,000 Shares Traded
Ticker | Name | Weekly Performance | Weekly Volume | AUM ($, mm) |
EEH | ELEMENTS Linked to SPECTRUM Large Cap U.S. Momentum ETN | 31.29% | 12,821 | 1.93 |
BRAF | Global X Brazil Financials | 11.41% | 4,509 | 2.92 |
EWZ | iShares MSCI Brazil Capped | 10.71% | 205,648,505 | 5,305.52 |
BRAQ | Global X Brazil Consumer | 10.12% | 25,730 | 10.26 |
FBZ | First Trust Brazil AlphaDex | 9.25% | 16,501 | 4.76 |
BRF | Market Vectors Brazil Small-Cap | 8.47% | 251,814 | 134.95 |
JJS | iPath Dow Jones-UBS Softs Total Return ETN | 8.37% | 4,295 | 3.80 |
FUE | ELEMENTS MLCX Biofuels Total Return ETN | 7.92% | 26,865 | 0.93 |
EWZS | iShares MSCI Brazil Small-Cap | 7.77% | 110,672 | 35.31 |
JO | iPath Dow Jones-UBS Coffee Total Return ETN | 7.57% | 777,273 | 103.99 |
Bottom 10 Weekly Performers, Excluding Leverage/Inverse Funds and <1,000 Shares Traded
Ticker | Name | Weekly Performance | Weekly Volume | AUM ($, mm) |
FCG | First Trust ISE-Revere Natural Gas | -10.53% | 3,371,233 | 340.74 |
XOP | SPDR S&P Oil & Gas Exploration & Production | -9.06% | 69,212,887 | 1,166.11 |
PBW | PowerShares WilderHill Clean Energy | -8.71% | 1,167,234 | 157.34 |
PSCE | PowerShares S&P SmallCap Energy | -8.64% | 64,912 | 29.98 |
TAN | Guggenheim Solar | -8.23% | 1,652,709 | 353.20 |
PXI | PowerShares DWA Energy Momentum | -7.80% | 396,494 | 214.35 |
XME | SPDR S&P Metals and Mining | -7.46% | 18,844,501 | 471.68 |
FRAK | Market Vectors Unconventional Oil & Gas | -7.41% | 355,592 | 78.16 |
QCLN | First Trust NASDAQ Clean Edge Green Energy | -7.34% | 484,536 | 113.38 |
OIL | iPath S&P GSCI Crude Oil Total Return ETN | -7.18% | 1,755,567 | 187.26 |
Top 10 YTD Performers
Ticker | Name | YTD Performance | Weekly Performance | AUM ($, mm) |
EEH | ELEMENTS Linked to SPECTRUM Large Cap U.S. Momentum ETN | 150.86 | 31.29 | 1.93 |
JO | iPath Dow Jones-UBS Coffee Total Return ETN | 95.16 | 7.57 | 103.99 |
CAFE | iPath Pure Beta Coffee ETN | 87.08 | 6.77 | 8.50 |
AGA | PowerShares DB Agriculture Double Short ETN | 79.45 | -11.28 | 2.55 |
DDP | PowerShares DB Commodity Short ETN | 75.49 | 6.09 | 2.56 |
TMF | Direxion Daily 20 Year Plus Treasury Bull 3x | 64.36 | 4.19 | 53.73 |
INDL | Direxion Daily India Bull 3X | 62.79 | 0.61 | 74.34 |
LBND | PowerShares DB 3X Long 25+ Year Treasury Bond ETN | 58.29 | 3.04 | 32.79 |
ITLT | PowerShares DB 3X Italian Treasury Bond Futures ETN | 54.52 | -0.50 | 23.16 |
DRN | Direxion Daily Real Estate Bull 3x | 51.03 | 6.74 | 85.80 |
Bottom 10 YTD Performers
Ticker | Name | YTD Performance | Weekly Performance | AUM ($, mm) |
JDST | Direxion Daily Junior Gold Miners Bear 3X | -74.69 | -7.67 | 43.62 |
RUSL | Direxion Daily Russia Bull 3X | -67.13 | -7.28 | 147.39 |
CVOL | C-Tracks Citi Volatility ETN | -58.53 | -0.70 | 5.64 |
GASL | Direxion Daily Natural Gas Related Bull 3X Shares | -56.78 | -29.66 | 18.89 |
TVIX | VelocityShares Daily 2X VIX Short Term ETN | -55.33 | 1.21 | 272.97 |
UVXY | ProShares Ultra VIX Short-Term Futures | -54.40 | 0.92 | 280.44 |
DGAZ | VelocityShares 3X Inverse Natural Gas ETN | -51.58 | 6.20 | 203.26 |
TMV | Direxion Daily 20 Year Plus Treasury Bear 3x | -45.66 | -4.38 | 553.84 |
TTT | ProShares UltraPro Short 20+ Year Treasury | -45.02 | -4.31 | 110.42 |
SBND | PowerShares DB 3X Short 25+ Year Treasury Bond ETN | -42.22 | -3.94 | 53.04 |
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.