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Some Bond ETFs Can’t Wait for 2013 to End


Sometimes, a change of the calendar is meaningful.

Bond funds can only hope so as investors have pulled a whopping $72 billion from bond mutual funds this year through the first week of December, CNN Money reports, citing TrimTabs data. Other anecdotes include 2013 being the first year in a decade investors have pulled more out of bond funds than they’ve put in and $72 billion in withdrawals easily tops the record of $63 billion in 1994, according to CNN.

The $72 billion pulled from bond funds this year is the equivalent of nearly two and a half Twitters (TWTR). Among ETFs, gold funds are taking a lot of flak for preventing industry assets from a reaching a record, but some bond funds have been less than cooperative as well.

Four bond ETFs, including the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) and the SPDR Barclays High Yield Bond ETF (JNK) , rank among the worst ETFs in terms of 2013 outflows. [Junk Bond ETFs Rise in November]

Ten-year Treasury yields have spurted higher by 55% this year, punishing longer-dated bonds and the ETFs that hold those bonds in the process. However, rising rates prompted a “duration rotation” as BlackRock puts it.

“The ETP industry did not experience a great rotation, but rather a duration rotation as flows shifted from longer- to shorter-maturity funds. Fixed Income ETP flows of $25.7bn through November were down from last year’s record-setting annual level of $70bn, but still strong. Short maturity products have steadily gathered $34.7bn while other maturities began to experience outflows in May and have shed ($9.0bn) year-to-date,” the asset manager said in its ETF Landscape piece published earlier this week. [TIPS ETFs Pinched by Rising Rates]

Although some noteworthy bond ETFs and mutual funds have suffered outflows, some ETFs have impressed with their asset-gathering proficiency.

The PowerShares Senior Loan Portfolio (BKLN) has hauled in $4.85 billion this year, making it the top PowerShares ETF when it comes to 2013 asset accumulation.

Of the 10 best new ETFs in terms of asset gathering, four a bond funds, a group that includes the Vanguard Total International Bond ETF (BNDX) and the SPDR Blackstone/GSO Senior Loan ETF (SRLN) . [10 New ETFs That Have Rapidly Gained Assets]

The iSharesBond 2020 Corporate Term ETF (IBDC) and the AdvisorShares Newfleet Multi-Sector Income ETF (MINC) are also among the rookie bond ETFs off to fast starts.

Chart Courtesy: CNN Money.

Tom Lydon’s clients own shares of JNK and LQD.