Post-Gross, BOND 18% Smaller; Flows Slow

If anyone doubted the importance of Bill Gross to PIMCO, look no further than the outflows from BOND.

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

If anyone doubted the importance of Bill Gross to PIMCO, look no further than the outflows from BOND.

In the week since Bill Gross unexpectedly resigned from PIMCO, investors have pulled nearly 20 percent of the assets from the PIMCO Total Return ETF (BOND | B) he managed, a conspicuous exception in a week that featured sizable inflows into bond funds amid a stock-market pullback.

Gross resigned on Friday, Sept. 26 from the Newport Beach, California-based bond shop he co-founded, and the outflows from BOND materialized quickly in the aftermath. In the week ended Thursday, Oct. 2, BOND lost a total of $662 million to outflows, or 18.6 percent of its assets, according to data compiled by ETF.com.

As noted, outflows from BOND stick out, as seven of the 10 most popular ETFs in the past week were fixed-income strategies. Investors have shifted into bonds amid signs that the end of quantitative easing in U.S. was fueling a pullback in equities led by small-cap stocks. Net outflows, including BOND’s, totaled $9 billion in the week, and U.S.-listed ETF assets fell 1.8 percent to $1.842 trillion.

Money in BOND following Gross out the door at PIMCO suggests that analysts such as Deborah Fuhr of U.K.-based ETF consultancy ETFGI have their finger on the pulse when they argue the popularity and marketing success of actively managed investment strategies rests heavily on the star power of the money managers who head them.

Top 10 Redemptions (All ETFs)

TickerNameNet Flows ($,mm)AUM ($, mm)AUM % Change
SPYSPDR S&P 500-7,757.60175,568.47-4.23%
QQQPowerShares QQQ-2,994.4540,787.99-6.84%
EEMiShares MSCI Emerging Markets-1,524.7737,311.53-3.93%
IWMiShares Russell 2000-1,058.9122,732.06-4.45%
IJHiShares Core S&P Mid-Cap-1,025.6522,074.67-4.44%
XLEEnergy Select SPDR-885.349,672.77-8.39%
IYEiShares U.S. Energy-839.421,090.08-43.50%
BONDPIMCO Total Return-662.942,910.10-18.55%
XLFFinancial Select SPDR-661.3118,262.46-3.49%
IYRiShares U.S. Real Estate-640.414,059.11-13.63%

 

Top 10 Creations (All ETFs)

TickerNameNet Flows ($,mm)AUM ($, mm)AUM % Change
SHYiShares 1-3 YearTreasury Bond1,665.679,823.5520.42%
IVViShares Core S&P 5001,535.6561,844.662.55%
AGGiShares Core U.S. Aggregate Bond1,209.5319,676.046.55%
BNDVanguard Total Bond Market1,056.4823,187.834.77%
BSVVanguard Short-Term Bond503.8515,120.363.45%
HYGiShares iBoxx $ High Yield Corporate Bond474.1812,847.323.83%
MBBiShares MBS432.026,724.816.87%
IEFiShares 7-10 Year Treasury Bond415.405,270.778.56%
FXHFirst Trust Health Care AlphaDex374.442,701.8916.09%
JNKSPDR Barclays High Yield Bond268.849,032.703.07%

ETF Weekly Flows By Asset Class

 Net Flows ($, mm)AUM ($, mm)% of AUM
U.S. Equity -13,393.151,011,912.01-1.32%
International Equity -1,355.72430,290.37-0.32%
U.S. Fixed Income 6,422.68263,576.312.44%
International Fixed Income -525.5124,046.92-2.19%
Commodities -409.4760,349.48-0.68%
Currency 24.881,591.811.56%
Leveraged 205.1721,230.490.97%
Inverse 259.2621,202.301.22%
Asset Allocation -6.865,275.46-0.13%
Alternatives -241.523,344.90-7.22%
Total:-9,020.231,842,820.05-0.49%

 


Anatomy Of The Outflows

 

We saw a spike in BOND’s trading volume on Friday, the day Gross left the firm, and surmised that that pointed to redemptions, in part because active managers like Bill Gross are crucial to the marketing success of the strategies they manage. The ETF was also trading at a discount to its net asset value, a sign of selling pressure.

Actual outflows materialized on Monday, Sept. 29, but they do seem to tailing off. In the four successive trading days ended yesterday, outflows were $445 million, $97 million, $87 million and $21 million, respectively. The way ETFs are structured, settlement of trades can occur from one day to six days after execution.

 

 

So, while flows out of BOND seem to be abating, we’ll continue to watch them closely in the coming days, weeks and months.

 

To put a price tag on BOND’s outflows, the firm is drawing $3.635 million less in annual income. That number is an approximation of how much revenue is linked to the loss of $662 million in BOND’s AUM given the ETF’s 55 basis point annual expense ratio.

PIMCO Soap Opera

Gross resigned unexpectedly last Friday 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.

Gross, until Thursday, Sept. 25, was the manager of BOND as well as its mutual fund version, the $200 billion PIMCO Total Return Fund (PTTRX). The mutual fund is the biggest fixed-income mutual fund in the world, and BOND, with $2.9 billion in assets, is now the second-biggest actively managed ETF after the $3.7 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 $200 billion.

MarketWatch reported on Friday that Charles Schwab was yanking PTTRX, the mutual fund version of the Total Return Fund, from its target-date fund menu. It’s yet another sign that the loss of a star manager has real-world consequences for a reputable firm like PIMCO, which remains the world’s biggest bond fund manager. The news service said more than $21 million left PTTRX in September.

As noted, Gross resigned suddenly last Friday and joined Janus Capital Group. Gross will run a new and small unconstrained bond fund. Gross will remain in Newport Beach and won’t relocate to Denver, where Janus is based.

 

 


 

Top 10 Volume Surprises, Funds >$50 mm AUM

TickerNameAverage Volume
(30 Day)
1 Week Average
Volume
% of Average
FKUFirst Trust United Kingdom AlphaDEX114,3652,705,629473.16%
TIPZPIMCO Broad U.S. TIPS84,0351,986,480472.77%
TZViShares Target Date 204010,490230,559439.58%
FRIFirst Trust S&P REIT249,4765,272,471422.68%
FXNFirst Trust Energy AlphaDEX685,74214,349,160418.50%
BONDPIMCO Total Return550,01111,499,967418.17%
CYBWisdomTree Chinese Yuan27,556567,159411.65%
RGIGuggenheim S&P Equal Weight Industrials13,434268,667399.97%
IYEiShares U.S. Energy1,170,69722,759,540388.82%
RTMGuggenheim S&P Equal Weight Materials16,230313,610386.46%

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

TickerNameWeekly PerformanceWeekly VolumeAUM ($, mm)
JOiPath Dow Jones-UBS Coffee Total Return ETN15.69%845,40499.57
CAFEiPath Pure Beta Coffee ETN9.95%56,4368.02
CVOLC-Tracks Citi Volatility ETN7.59%476,2235.68
VXXiPath S&P 500 VIX Short-Term Futures ETN4.09%272,082,6401,254.77
VXZiPath S&P 500 VIX Mid-Term Futures ETN4.08%7,430,46173.82
JJSiPath Dow Jones-UBS Softs Total Return ETN3.79%1,0753.61
VIIXVelocityShares VIX Short Term ETN3.75%343,0448.13
VIXYProShares VIX Short-Term3.70%12,443,368142.99
COWiPath Dow Jones-UBS Livestock Total Return ETN3.60%116,77343.59
VIIZVelocityShares VIX Mid Term ETN3.47%5,6301.66

 


Bottom 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 ETN-15.59%11,4811.47
BRAFGlobal X Brazil Financials-9.78%16,7912.64
TAGSTeucrium Agricultural-8.23%1,7901.54
RSXJMarket Vectors Russia Small-Cap-7.83%219,97572.32
NIBiPath Dow Jones-UBS Cocoa Total Return ETN-7.69%105,40421.88
CHIMGlobal X China Materials-7.45%62,1523.01
EWHSiShares MSCI Hong Kong Small-Cap-7.41%57,6195.64
CHOCiPath Pure Beta Cocoa ETN-7.29%22,7729.41
JJNiPath Dow Jones-UBS Nickel Total Return ETN-7.27%22,8339.61
URAGlobal X Uranium-6.98%1,613,803229.92

Top 10 YTD Performers

TickerNameYTD PerformanceWeekly PerformanceAUM ($, mm)
AGAPowerShares DB Agriculture Double Short ETN102.284.522.87
EEHELEMENTS Linked to SPECTRUM Large Cap U.S. Momentum ETN91.08-15.591.47
JOiPath Dow Jones-UBS Coffee Total Return ETN81.4315.6999.57
CAFEiPath Pure Beta Coffee ETN75.229.958.02
DDPPowerShares DB Commodity Short ETN65.421.782.41
INDLDirexion Daily India Bull 3X61.801.1973.86
TMFDirexion Daily 20 Year Plus Treasury Bull 3x57.753.4048.10
ITLTPowerShares DB 3X Italian Treasury Bond Futures ETN55.300.3623.28
LBNDPowerShares DB 3X Long 25+ Year Treasury Bond ETN53.633.4331.82
SOXLDirexion Daily Semiconductor Bull 3X50.14-7.63103.55

Bottom 10 YTD Performers

TickerNameYTD PerformanceWeekly PerformanceAUM ($, mm)
JDSTDirexion Daily Junior Gold Miners Bear 3X-72.5919.4842.88
RUSLDirexion Daily Russia Bull 3X-64.55-16.04154.13
CVOLC-Tracks Citi Volatility ETN-58.247.595.68
TVIXVelocityShares Daily 2X VIX Short Term ETN-55.876.77270.54
UVXYProShares Ultra VIX Short-Term Futures-54.817.44264.44
DGAZVelocityShares 3X Inverse Natural Gas ETN-54.411.51235.86
SOXSDirexion Daily Semiconductor Bear 3X-45.527.4129.65
TMVDirexion Daily 20 Year Plus Treasury Bear 3x-43.17-3.77572.84
TTTProShares UltraPro Short 20+ Year Treasury-42.54-3.78116.13
USLVVelocityShares 3X Long Silver ETN-39.97-7.56135.88

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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