Friday, June 21, 2013

Fixed income party is over - for now

This has been one of the worst months for fixed income assets in years. Active investors are dumping bonds of all types. Here is what the performance looks like over a period of a month (through today).

A great deal of this selling has been forced by ETFs. Lower valuations force the exchange of shares for the underlying securities, which are then sold into the market. Mutual funds are losing capital as well. Firms like BlackRock (BLK) have had an amazing run in recent years (see discussion), but the party is over. BLK is down 11.5% over the past month.
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