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Outflows from bond mutual funds is an important and topical issue. A new BIS working paper posted today looks at the determinants of bond fund outflows and their consequences
bis.org/publ/work868.h…
Poorly performing funds are more susceptible to investor outflows, but the laggards are particularly vulnerable for bond funds
It is a matter of "devil take the hindmost" with the laggards being punished hardest

For equity funds, it is a case of "winner take all", and there is less discrimination between middling and poor performers
Interestingly, the laggards in the bond fund universe seem to understand all this; the laggards are much more likely to "de-risk" their holdings if they fall behind the pack
These findings are of great practical importance for the monitoring of market functioning and financial stability; bond mutual funds have grown hugely in recent years, at a pace that has outstripped equity funds
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Hyun Song Shin
@HyunSongShin
The pandemic has been a perfect storm for emerging markets; the latest #BIS_Bulletin looks at how EME central banks intervened in their bond markets to quell financial turmoil
bis.org/publ/bisbull20…
Bond purchases by EME central banks complemented cuts in policy rates to ease financial conditions
Bond purchases were were also notable in being unsterilised; EME central banks bought bonds outright financed with reserves of the banking sector
Read 9 tweets
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Hyun Song Shin
@HyunSongShin
BIS Bulletin 6 looks at recent stresses in credit markets through the lens of exchange traded funds (ETFs)
bis.org/publ/bisbull06…
@BIS_org Image
ETFs trade as shares and offer immediate liquidity, even for illiquid underlying assets; specialised intermediaries called “authorised participants” issue or redeem ETF shares in response to market demand
This Bulletin examines how ETFs performed during the recent period of stress in corporate credit markets when spreads rose sharply Image
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Hyun Song Shin
@HyunSongShin
BIS Bulletin 5 deals with the recent turbulence experienced by emerging market economies
bis.org/publ/bisbull05…
@BIS_org
Borrowing in domestic currency has not insulated emerging markets from the global shock unleashed by Covid-19; local currency bond spreads spiked and currencies fell as EMEs experienced large portfolio outflows
Recent experience conforms to the general rule that emerging market sovereign spreads and weaker EME currencies go hand-in-hand; except that this time, it was on display with a vengeance (see the spikes in the left-hand panel)
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