From Bloomberg:
The amount of money flowing into bond funds is poised to exceed the cash that went into stock funds during the Internet bubble, stoking concern fixed-income markets are headed for a fall.
Investors poured $480.2 billion into mutual funds that focus on debt in the two years ending June, compared with the $496.9 billion received by equity funds from 1999 to 2000, according to data compiled by Bloomberg and the Washington-based Investment Company Institute.
Concern the global economic recovery is faltering, with the U.S. growing at a slower-than-forecast 2.4 percent pace in the second quarter, is prompting investors to pile into fixed-income securities of all types even with some yields at record lows. The new cash has helped fuel a rally and drove yields on investment-grade U.S. corporate debt down to a record 3.79 percent last week, while two-year U.S. Treasury yields fell to an all-time low of less than 0.5 percent.
The money flowing into bonds is "probably not repeatable on a consistent basis," said Joel Levington, managing director of corporate credit in New York at Brookfield Investment Management Inc., which oversees $24 billion. "Eventually it won't be sustainable. Whether that means five years from now or five weeks is a little difficult to tell," he said.
Accelerating Returns
Bank of America Merrill Lynch's Global Broad Market Index, which tracks more than 19,100 bonds of all types with a market value of $37.6 trillion, has gained 1.31 percent this month, the best since July 2009. The index is on track for an annual return of 10.2 percent, which would be the best since the measure was created in 1997.
More on bond funds:
The U.S. bond bubble could have popped already...
The bond market says stocks could fall another 25%
Top analyst Ritholtz: U.S.Treasury bonds are headed for a "dot com" crash
