Industry Highlights and Trends

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Here's a summary of notable news and events in the industry:

  • Fed Concerns Scare Billions from Bond ETFs

Fear over Fed interest rate hikes spurred investors to withdraw billions from bond ETFs this month. Bloomberg reports there were $6.1 billion in outflows from bond ETFs through March 16, or 1.9% of total fund assets, according to TrimTabs Investment Research data.
Outflows concentrated among funds investing in U.S. government debt and bonds with longer duration. Bloomber reports that government-bond funds suffered roughly $3.6 billion in withdrawals this month, while long-term bond funds lost $1.2 billion. Hit with its biggest three-week withdrawl ever was the iShares 20+ Year Treasury Bond ETF, losing 17% of its asset size in March.

"When interest rates go up, the prices of current bonds go down," David Santschi, chief executive officer of TrimTabs, tells Bloomberg. The Fed has dropped its promise to be "patient," and it is expected that it will raise rates in either the summer or fall.

The outflows gushing from the bond-ETF market this month follows five consecutive months of inflows totaling $46.8 billion, TrimTabs reports.

  • Reich & Tang to Liquidate $9.5BN in Money Market Funds

Deciding to shed its investment management business, Reich & Tang announced it would be ending all of its money market funds, totaling $9.5 billion in AUM. The firm, an affiliate of Natixis Global Asset Management, said it will focus instead on growing its FDIC-insured sweep programs for banks, trusts, brokerages, RIAs and other private and public investment programs.
"Given the ongoing regulatory changes that are being added to the already challenging landscape for money funds, the ability for mid-tier money fund sponsor firms to thrive becomes significantly diminished," said Michael Lydon, Reich & Tang's president and CEO, in a statement.

The fund liquidation will be complete by the end of July, the firm said.

  • ETF Asset Records Continue to be Toppled

Another month brings another record for ETFs and associated products, industry research firm ETFGI reports.
Total assets invested in ETFs/ETPs in the United States have reached a new record high of $2.09 trillion as of the end of February 2015, according to ETFGI's monthly ETF and ETP global insight report.

ETFs and ETPs in the U.S. saw net inflows of $34.4 billion while active ETFs added $2 billion in net assets, the highest ever recorded, ETFGI said. It was also reported that equity ETFs and ETPs saw the largest inflows at $18.8 billion. Fixed income ETFs and ETPs reported $11.7 billion in inflows while commodity ETFs and ETPs saw net inflows of $1.5 billion.

Topping the list of funds in February was iShares at $14 billion net inflows, ETFGI said. This was followed by Vanguard at $5.2 billion and SPDR ETFs with $2.4 billion in net inflows.

  • New CEO Chosen for Praxis Mutual Funds

Everence Capital Management announced a new president and CEO to head the company's mutual fund family, Praxis Mutual Funds.
Chad Horning, the current chief investment officer for Everence, will not only serve as senior vice president of the company, but will also become the new president and CEO for Praxis, the firm said. Horning will succeed outgoing Praxis President David C. Gautsche, who served as president of the fund since 2012, according to the firm.

Before joining Everence in 1999, Horning was an economic analyst for DevTech Systems, an international consulting firm based in Washington, D.C., according to the firm. Horning currently serves as co-portfolio manager for the Praxis Value Index Fund, Praxis Growth Index Fund and Praxis Genesis Portfolios, Everence said.

Gautsche will now become president and chief executive officer of Goodville Mutual Casualty Company in Pennsylvania, the firm noted.

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