June Fund Flow Review: Bonds Away

According to a Morningstar, Inc. (NASDAQ:MORN) report investors redeemed $58 billion from long-term mutual funds and ETFs in June. Bond mutual funds and ETFs had record outflows of $68 billion (surpassing the $36 billion redeemed in October 2008) as investors were concerned with the potential winding down of the Federal Reserve’s bond purchase program and resulting upward pressure on interest rates. Equity fund flow held up relatively well, but there is no evidence of bond redemptions rotating into equities.

ETFs had outflows for the first time since March 2011 as investors redeemed both equity and fixed income funds. However, flows held up relatively stronger than mutual funds with $10 billion of outflows.