NYSSA High Yield Bond Seminar EPFR Global An Informa plc Company +1.617.864.4999 Adam Longenecker Director, Quantitative Research [email protected]JC Moos Director, Sales [email protected]Company & Data Overview Market Commentary EPFR Global - Fund Flow & Allocations Data [email protected]Know the Flows. NYSSA High Yield Bond Seminar – June 2013
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NYSSA High Yield Bond Seminar June 2013 - EPFR Global · NYSSA High Yield Bond Seminar EPFR Global An Informa plc Company +1.617.864.4999 Adam Longenecker Director, Quantitative Research
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EPFR Global – Fund Flow & Allocations Data -6- Know The Flows.
ETFs As a % of All High Yield
ETFs are a growing
portion of the database. Now
about 10%
Their inclusion has increase the volatility and speed of
shifts in market direction.
1Q08 1Q10 1Q13 1Q09 1Q11 1Q12
NYSSA High Yield Bond Seminar
The Growing Role of ETFs
Overview of EPFR High Yield Data
EPFR Global – Fund Flow & Allocations Data -7- Know The Flows.
-$4,000
-$3,000
-$2,000
-$1,000
$0
$1,000
$2,000
$3,000
$4,000
20
13
/06
/05
20
13
/05
/22
20
13
/05
/08
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/04
/24
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/04
/10
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/03
/27
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/03
/13
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/02
/27
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/02
/13
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/01
/30
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/01
/16
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/01
/02
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/12
/19
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/12
/05
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/21
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/11
/07
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/10
/24
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/10
/10
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/09
/26
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/09
/12
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/08
/29
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/08
/15
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/08
/01
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/07
/18
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/20
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/06
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/05
/23
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/05
/09
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/04
/25
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/04
/11
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/03
/28
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/03
/14
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/29
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/02
/15
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/02
/01
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/01
/18
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/04
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/21
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/07
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/23
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/09
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/26
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/10
/12
20
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/09
/28
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/14
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/08
/31
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/17
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/03
20
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/07
/20
20
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/07
/06
20
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/06
/22
20
11
/06
/08
ETF
Mutual Fund
The past three routs in
high yield flows have
been led by ETF flows,
rather than mutual funds
ETF fund flows have led the past 3 major exoduses from HY
We’ll get to why this is significant
later
1Q13 1Q12
NYSSA High Yield Bond Seminar
-$160,000
-$120,000
-$80,000
-$40,000
$0
$40,000
$80,000
$120,000
$160,000
-$40,000
-$30,000
-$20,000
-$10,000
$0
$10,000
$20,000
$30,000
$40,000
Cash Flowing Off of the Sidelines…
EPFR Global – Fund Flow & Allocations Data -8- Know The Flows.
Money Market Fund Flows (YTD)
Fu
nd
Flo
ws
(US
D m
il)
Cu
mu
lative Flo
ws (U
SD
mil)
After a rocky start, cash has
been flowing off sidelines
consistently since mid January
Last week started the
strongest reversal of this trend
YTD
So where has it all been going?
1Q13 2Q32
Cash is being put to work this
year, but where?
Weekly
Fund Flows
(USD mil)
Daily
Fund Flows
(USD mil)
Daily
Cumulative
(USD mil)
NYSSA High Yield Bond Seminar
-$3,000
-$2,000
-$1,000
$0
$1,000
$2,000
$3,000
06
/05/1
3
05
/22/1
3
05
/08/1
3
04
/24/1
3
04
/10/1
3
03
/27/1
3
03
/13/1
3
02
/27/1
3
02
/13/1
3
01
/30/1
3
01
/16/1
3
01
/02/1
3
12
/19/1
2
12
/05/1
2
11
/21/1
2
11
/07/1
2
10
/24/1
2
10
/10/1
2
09
/26/1
2
09
/12/1
2
08
/29/1
2
08
/15/1
2
08
/01/1
2
07
/18/1
2
07
/04/1
2
06
/20/1
2
06
/06/1
2
05
/23/1
2
05
/09/1
2
04
/25/1
2
04
/11/1
2
03
/28/1
2
03
/14/1
2
02
/29/1
2
02
/15/1
2
02
/01/1
2
01
/18/1
2
01
/04/1
2
12
/21/1
1
12
/07/1
1
11
/23/1
1
11
/09/1
1
10
/26/1
1
10
/12/1
1
09
/28/1
1
09
/14/1
1
08
/31/1
1
08
/17/1
1
08
/03/1
1
07
/20/1
1
07
/06/1
1
06
/22/1
1
06
/08/1
1
05
/25/1
1
05
/11/1
1
04
/27/1
1
04
/13/1
1
03
/30/1
1
03
/16/1
1
03
/02/1
1
02
/16/1
1
02
/02/1
1
01
/19/1
1
01
/05/1
1
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
-$2,000
-$1,500
-$1,000
-$500
$0
$500
$1,000
$1,500
$2,000
-$30,000
-$20,000
-$10,000
$0
$10,000
$20,000
$30,000
$40,000
$50,000
Floating Rate Funds – What goes down, must come up
And Into Funds Like…
EPFR Global – Fund Flow & Allocations Data -9- Know The Flows.
Dividend Equity Funds – Hugely popular
High Yield – Keeping Up?
The US 10 Year cannot
stay below 2% forever.
Yields are likely to rise
above and stay above
this level by the end of
2013.
Investors are acting
accordingly by buying
Floating rate bond
funds
-$100,000
-$80,000
-$60,000
-$40,000
-$20,000
$0
$20,000
$40,000
$60,000
$80,000
$100,000
-$6,000
-$4,000
-$2,000
$0
$2,000
$4,000
$6,000
06
/05/1
3
05
/22/1
3
05
/08/1
3
04
/24/1
3
04
/10/1
3
03
/27/1
3
03
/13/1
3
02
/27/1
3
02
/13/1
3
01
/30/1
3
01
/16/1
3
01
/02/1
3
12
/19/1
2
12
/05/1
2
11
/21/1
2
11
/07/1
2
10
/24/1
2
10
/10/1
2
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/26/1
2
09
/12/1
2
08
/29/1
2
08
/15/1
2
08
/01/1
2
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/18/1
2
07
/04/1
2
06
/20/1
2
06
/06/1
2
05
/23/1
2
05
/09/1
2
04
/25/1
2
04
/11/1
2
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/28/1
2
03
/14/1
2
02
/29/1
2
02
/15/1
2
02
/01/1
2
01
/18/1
2
01
/04/1
2
12
/21/1
1
12
/07/1
1
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/23/1
1
11
/09/1
1
10
/26/1
1
10
/12/1
1
09
/28/1
1
09
/14/1
1
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/31/1
1
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/17/1
1
08
/03/1
1
07
/20/1
1
07
/06/1
1
06
/22/1
1
06
/08/1
1
05
/25/1
1
05
/11/1
1
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/27/1
1
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/13/1
1
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/30/1
1
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/16/1
1
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/02/1
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/16/1
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1
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/19/1
1
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/05/1
1
1Q11 1Q12 1Q13
1Q11 1Q12 1Q13
1Q11 1Q12 1Q13
Do record supplies and
the threat of rising
interest rates have
investors running for the
door?
Floating rate is
booming
Storm clouds
brewing for Dividend
equity
HY certainly doesn’t
show the momentum is once had last year, but the
picture is more
compelling when you
break it out by region
NYSSA High Yield Bond Seminar
A Closer Look at High Yield Fund Flows
How Bad Will It Be?
-$8,000
-$6,000
-$4,000
-$2,000
$0
$2,000
$4,000
$6,000
USA Global EuropeF
un
d F
low
s (U
SD
mil)
-$6,158-$5,415 -$5,404 -$5,405
Recent Corrections
in the High Yield Bond Market
The most recent rout in
high yield markets has
already reached critical
mass, and done so in
record time
The increased speed in
which these events
occur is likely linked to
the growing role of
ETFs in the marketplace
1Q11 1Q12 1Q13
Look at it this way,
and USA HY has been lackluster
since 4Q12
most corrections in HY bond
market lasted at least 4
weeks, and were
around 5.5B in scale. We are already there, two weeks in.
This is probably
the big one.
EPFR Global – Fund Flow & Allocations Data -10- Know The Flows.
NYSSA High Yield Bond Seminar
High Yield vs Investment Grade Fund Flows
-$5,000
-$2,500
$0
$2,500
$5,000
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
-$500
-$250
$0
$250
$500
-50.0%
-25.0%
0.0%
25.0%
50.0%
-$1,500
-$1,000
-$500
$0
$500
$1,000
$1,500
-20.0%
-10.0%
0.0%
10.0%
20.0%
-$8,000
-$6,000
-$4,000
-$2,000
$0
$2,000
$4,000
$6,000
$8,000
20
13
/05
/01
20
13
/04
/24
20
13
/04
/17
20
13
/04
/10
20
13
/04
/03
20
13
/03
/27
20
13
/03
/20
20
13
/03
/13
20
13
/03
/06
20
13
/02
/27
20
13
/02
/20
20
13
/02
/13
20
13
/02
/06
20
13
/01
/30
20
13
/01
/23
20
13
/01
/16
20
13
/01
/09
20
13
/01
/02
20
12
/12
/26
20
12
/12
/19
20
12
/12
/12
20
12
/12
/05
20
12
/11
/28
20
12
/11
/21
20
12
/11
/14
20
12
/11
/07
20
12
/10
/31
20
12
/10
/24
20
12
/10
/17
20
12
/10
/10
20
12
/10
/03
20
12
/09
/26
20
12
/09
/19
20
12
/09
/12
20
12
/09
/05
20
12
/08
/29
20
12
/08
/22
20
12
/08
/01
20
12
/08
/15
20
12
/08
/08
20
12
/08
/01
20
12
/07
/25
20
12
/07
/18
20
12
/07
/11
20
12
/07
/04
20
12
/06
/27
20
12
/06
/20
20
12
/06
/13
20
12
/06
/06
20
12
/05
/30
20
12
/05
/23
20
12
/05
/16
20
12
/05
/09
20
12
/05
/02
20
12
/04
/25
-0.5%
-0.3%
-0.1%
0.1%
0.3%
0.5%
-$4,000
-$3,000
-$2,000
-$1,000
$0
$1,000
$2,000
$3,000
$4,000
20
13
/05
/01
20
13
/04
/24
20
13
/04
/17
20
13
/04
/10
20
13
/04
/03
20
13
/03
/27
20
13
/03
/20
20
13
/03
/13
20
13
/03
/06
20
13
/02
/27
20
13
/02
/20
20
13
/02
/13
20
13
/02
/06
20
13
/01
/30
20
13
/01
/23
20
13
/01
/16
20
13
/01
/09
20
13
/01
/02
20
12
/12
/26
20
12
/12
/19
20
12
/12
/12
20
12
/12
/05
20
12
/11
/28
20
12
/11
/21
20
12
/11
/14
20
12
/11
/07
20
12
/10
/31
20
12
/10
/24
20
12
/10
/17
20
12
/10
/10
20
12
/10
/03
20
12
/09
/26
20
12
/09
/19
20
12
/09
/12
20
12
/09
/05
20
12
/08
/29
20
12
/08
/22
20
12
/08
/01
20
12
/08
/15
20
12
/08
/08
20
12
/08
/01
20
12
/07
/25
20
12
/07
/18
20
12
/07
/11
20
12
/07
/04
20
12
/06
/27
20
12
/06
/20
20
12
/06
/13
20
12
/06
/06
20
12
/05
/30
20
12
/05
/23
20
12
/05
/16
20
12
/05
/09
20
12
/05
/02
20
12
/04
/25
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
Investment Grade Fund Flows*
High Yield Fund Flows
HY Fund Flows by Region
*Note on Methodology: Investment Grade Fund Flows is a custom group that includes all Short, Intermediate, and Long Term Corporate, Government, and Blend Bond Funds