Bond funds end bad year with another headache
money managers are finding themselves in an unfamiliar position: selling some of the bond funds that have long been mainstays of their clients portfolios.
With the benchmark Standard Canada Goose sale Poor 500 Index up around 25 percent for the year, financial advisors are looking to sell some of their worst like it performing bond funds before the canada goose canadagooseparkasoutlet coats on sale end of December, in order cheap Canada Goose to book losses to offset capital gain taxes on their stock portfolios.
While tax motivated selling is common at the end of any year, what makes 2013 different is that investors are offloading canada goose store popular bond funds offered by giants like Pimco, T. Rowe Price and Vanguard, rather than riskier stock funds.
not a whole lot of other losses out there, said Timothy Courtney, who oversees $1.2 billion in client assets as the chief investment officer at Oklahoma City based firm Exencial Wealth Advisors.
The broad bond Canada Goose Parka market is down more than 4 percent for the year, hurt by expectations that the Federal Reserve would soon begin pulling back on its $85 billion a month stimulative bond purchases.
Some advisors say they may not move money back into bond funds in 2014, even after the 30 days they are required canada goose black friday sale to wait before repurchasing an investment on which they claimed a loss.
year we see investors running from bad performance when they set their new asset allocations, said Todd Rosenbluth, director of mutual fund research at S CapitalIQ. want their money to work for them, and bond funds certainly haven been delivering like they used to.
Bond funds are supposed to be stable investments that provide a steady dividend income at lower risks than alternatives. But Canada Goose online uncertainty over the Fed move has dogged the market in the second half of 2013 canadian goose jacket and helped push bond prices down, sending yields higher. bond mutual funds between June and November, according to estimates from Lipper, a Thomson Reuters canada goose replica company.
Outflows may accelerate towards the buy canada goose jacket cheap end of the year, said Tom Roseen, head of research services at Lipper, due to so called dressing, when portfolio managers pull losers out of their portfolios before clients can read about them in year end reports. bond market canada goose outlet toronto factory as a whole has dropped 4.1 percent. Some sectors such as inflation protected bonds and emerging market debt had steeper declines as commodity prices fell.
An unusual number of the year worst performing large mutual funds and ETFs are primarily invested in bonds. Typically, they are tilted more towards 2018 canada goose outlet stock funds or commodities funds, both of which tend to take larger risks or use leverage that can compound losses.
This year, however, 73 out of the 168 mutual funds with more than a $1 billion in assets and losses of more than 3 canada goose clearance sale percent for the year are bond funds, according to Lipper data.
Several investor mainstays are among the canada goose outlet store locations underperformers. The $16.8 billion PIMCO Real Return fund, which focuses on inflation protected bonds, has tumbled more than 8.5 percent for the year. The $3.9 billion T. Rowe Price International Emerging Markets Bond fund has dropped 8.3 Canada Goose Coats On Sale percent, while the Canada Goose Jackets $1.5 billion Vanguard Long Term Treasury buy canada goose jacket fund has shed 12 canada goose clearance percent for the year.
Those losses have put bond fund managers on the defensive. In an August letter to clients, Pimco Bill Gross urged investors to not up on bonds.
while containing a certain amount of maturity risk Canada Goose Online by very definition will never be antiquated, Gross wrote. The Pacific Investment Management Co is a unit of Allianz SE.
The Pimco Real Return fund has had outflows of $6.9 billion in its Canada Goose Outlet combined share classes for the year through the canada goose deals end of November, canada goose coats according to Morningstar, compared with net inflows of 1.8 canada goose billion in 2012 and 1.3 billion in 2011.
Courtney, the Oklahoma money manager, said that he has already completed his selling for the year, and he is not planning on adding more bond exposure in the new year.
expecting to be underweight bonds for a while, he said. (Additional reporting by Jennifer Ablan; Editing by Linda Stern, Tiffanu Wu and Grant McCool).