Plus, Schroder muni funds liquidate, T. Rowe Price launches bond fund, and more.
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The recent market upheaval has triggered the largest wave of monthly net redemptions in the history of the mutual fund industry. In September, investors pulled an estimated $47.5 billion out of mutual funds, capping off an erratic month that featured the federal takeover of Freddie Mac
Almost no asset class was left unscathed. International stock funds were hit the hardest, with more than $19.9 billion in outflows in September. U.S. stock funds weren't far behind, experiencing roughly $19 billion in net redemptions. Balanced funds, which buy both stocks and bonds, saw a drop of nearly $5.9 billion, and taxable and municipal bonds faced estimated net outflows of $1.6 billion and $1.4 billion, respectively. The alternative asset class--which includes long-short, bear market, currency, and precious-metals funds--was the only class that didn't experience redemptions, instead seeing inflows of $340 million. Many of these funds have historically performed well when the rest of the market is suffering.
September's substantial outflows were far worse than those experienced during any month of the bear market of 2000-2002. July 2002 was the worst month during that stretch and saw net redemptions of $17.4 billion (roughly three times less than September 2008's outflows). Although investors fled from stock funds in droves during that bear market, they moved a lot of money into bond funds, which were thriving at the time. This time around, though, the current credit crisis has roiled nearly every segment of the market, and many investors have simply pulled their money out of mutual funds altogether.
Schroder Funds Bite the Dust
Massive shareholder redemptions have forced Schroder Municipal Bond
The funds closed to new shareholders Oct. 14, and the liquidation will occur in stages. Shareholders can expect the first capital distribution on or around Nov. 28 and subsequent distributions after that. Schroder also announced that fund comanager Susan Beck has taken over leadership of the firm's muni team from David Baldt, although Baldt remains with the firm.
Muhlenkamp Mulls Fund Distributions
We always like to see managers putting shareholders' interests first, and Muhlenkamp's call for input is certainly a shareholder-friendly move. The small, one-fund shop with $865 million in assets may also be hoping to deter redemptions by trying to keep investors happy.