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Vanguard Has First Monthly Redemptions in Almost 20 Years

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Fed Chairman Ben S. Bernanke
The flight from bonds was triggered by Federal Reserve Chairman Ben S. Bernanke, who told Congress on May 22 that the U.S. central bank may start reducing its bond purchases. Photographer: Andrew Harrer/Bloomberg

July 9 (Bloomberg) -- Vanguard Group Inc., the biggest U.S. mutual-fund firm, had its first monthly redemptions in almost 20 years in June as investors sold bond funds in anticipation of the Federal Reserve scaling back its asset purchases.

Vanguard saw net withdrawals of $100 million from mutual funds and exchange-traded funds for the month, the first since December 1994, John Woerth, a spokesman for the Valley Forge, Pennsylvania-based firm, wrote in an e-mailed statement. Investors pulled $9.7 billion from the company’s bond offerings, while adding to stock funds and money-market products.

“All streaks must come to an end,” Woerth wrote in the e-mail. Vanguard attracted $76.8 billion in investor deposits in the first half of 2013, he said.

The flight from bonds was triggered by Fed Chairman Ben S. Bernanke, who told Congress on May 22 that the U.S. central bank may start reducing its bond purchases. The yield on the 10-year Treasury note climbed to 2.64 percent today from 1.93 percent on May 21, according to data compiled by Bloomberg.

Investors pulled about $60 billion from U.S. bond funds in June, the biggest monthly redemptions in records going back to 1961, according to estimates from the Investment Company Institute. Pacific Investment Management Co., the world’s largest active fixed-income manager, had a record $14.5 billion in net redemptions.

Vanguard managed more than $2.2 trillion in U.S. fund assets as of May 31, according to its website.

To contact the reporter on this story: Charles Stein in Boston at cstein4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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