This week's notable news:
- PIMCO FUNDS LOST $150BN AFTER GROSS EXIT IN 2014
The abrupt departure of Bill Gross from Pimco last September cost the asset management firm's funds $150 billion in 2014, Bloomberg reported, including almost $5 billion withdrawn by New York City's five pension funds.
Investors pulled $102.9 billion from its biggest fund, the $143.4 billion Pimco Total Return Fund, through Dec. 31, according to data from Morningstar.
The Pimco Unconstrained Bond Fund suffered the second-biggest withdrawals, with $15.9 billion in redemptions last year to bring assets to $11.5 billion.
Once the U.S.' largest mutual fund, the Total Return Fund is now the fourth-largest, according to Bloomberg, adding its decline has erased more than five years of growth at the fund.
Among investors that moved money from Pimco in 2014 were the Trustees for the $160 billion retirement funds for New York City police officers, firefighters, teachers, school administrators and civil employees, Bloomberg reported.
Officials cited concerns regarding Pimco's management issues related to Gross's exit as their reason for their investment decision. The five funds still hold $2.4 billion in TIPS with Pimco.
- BILLIONS PLOWED INTO BLACKROCK ETFs
BlackRock ETFs captured $102.8 billion in investments in 2014, according to a release from the world's largest asset manager. BlackRock's iShares unit, the marketplace's biggest provider of ETFs, received 31% of the record $330.7 billion of investments into ETFs worldwide in 2014, the New York-based firm said.
BlackRock added iShares' bond ETFs gained $40.3 billion, roughly 48% of the new money that went into fixed-income products.
"We're seeing ETFs truly come of age, as more investors around the world recognize and embrace the versatility of these vehicles - whether it's for their strategic buy-and-hold investments or precision exposures to express a view on virtually any market," Mark Wiedman, global head of iShares, said in the statement. "ETFs have also been discovered by capital market participants, who are using them as efficient substitutes for futures and swaps."
BlackRock entered the $2.6 trillion ETF industry through its 2009 acquisition of Barclays's investment unit. The business accounted for 23% of BlackRock's $4.5 trillion in assets as of Sept. 30, Bloomberg reported, and 35% of investment-advisory fees.
Clients had more than $1 trillion in iShares as of Dec. 31, BlackRock said. In the U.S., it enjoyed a record $82.8 billion of new assets in 2014, beating the 2012 record of $62 billion. In Europe, the business added $20.3 billion. Investors in Asia and Latin America added $19.8 billion through Nov. 30.
- VANGUARD TO OFFER MUNICIPAL BOND ETF
Vanguard Group oversees about $140 billion in municipal debt. Now it plans to offer its first ETF focused on the $3.6 trillion U.S. municipal bond market, according to Bloomberg.
The Valley Forge, Pa.,-based asset management firm registered the tax-exempt index fund with the SEC, according to a release, and it expects the fund to be available by the end of June.
Adam Ferguson, who currently manages muni funds at Vanguard, will oversee the fund, the firm said in its release.
The fund's benchmark, the S&P National AMT-Free Municipal Bond Index, is the same as the $4.2 billion iShares National AMT-Free Muni Bond ETF. That is the largest such fund tracking state and city bonds.
"For investors in high tax brackets, a high-quality, broadly diversified municipal bond fund or ETF can provide tax advantages as well as diversification from the risks of the equity market," Vanguard CEO Bill McNabb said in the statement.
Bloomberg reports that tax-exempt interest on munis has become appealing for high earners, who in 2014 faced the highest top tax bracket since 2000. Including a 3.8% tax on the investment income of top earners resulting from the 2010 Patient Protection and Affordable Care Act, the top federal rate is 43.4%.
- U.S. ANNUITY MARKET INCREASINGLY FRAGMENTED
Variable annuity net sales are reaching new lows, causing U.S. insurers to innovate toward retirement income opportunities, Cerulli researchers report.
"After a decline in supply of variable annuities with rich guaranteed living benefits (traditional variable annuities), the annuity marketplace is undergoing significant fragmentation," states Chris Nadai, senior analyst at Cerulli.
"Given the recent restrictions and reduction of benefits for traditional variable annuities, the advisor and investor have shifted the demand curve to buying these benefits in separate products from insurers to reduce annual fees and risk of future benefit changes," he adds.
