Is the Bank-Loan Sell-Off Temporary?
Bank-loan funds have seen outflows in 2014 as investors have become less concerned about rising rates, but flows to such funds could increase when rates do eventually move higher.
Mike Rawson: The biggest surprise in fund flows so far in 2014 has been inflows into bond funds. Last year we saw sharp outflows from bond funds as interest rates began to rise and investors began to anticipate a further rise in interest rates. In fact, in 2013, we saw $80 billion leave intermediate-term bond funds. So far in 2014, about $12 million has gone back into these funds, as interest rates have stabilized and even come down in some cases, and as the stock market appears to be fully valued. So, it's forcing our investors to reconsider their allocation to bond funds.