Guggenheim Partners investors pulled $2.4 billion from its four largest mutual funds in September after reports that federal authorities are probing Chief Executive Officer Mark Walter’s business dealings.
The redemptions include $1.8 billion from Guggenheim Total Return Bond Fund, the firm’s largest publicly traded mutual fund, according to Morningstar Inc. estimates. Outflows reached 6.1% of the fund, which fell to less than $29 billion.
Redemptions also included $222.4 million from Guggenheim Macro Opportunities Fund, $317 million from Guggenheim Limited Duration Fund and $64.9 million from the Guggenheim Core Bond Fund, according to Morningstar.
Guggenheim’s September mutual fund withdrawals climbed from $647 million in August and $103 million in July, according to Morningstar estimates.
Despite the outflows in fixed-income funds recently, Guggenheim has seen continued investment across its institutional and retail strategies, a firm spokesperson said.
“Our funds continue to deliver competitive investment performance, with each of the referenced funds carrying a four- or five-star Morningstar rating,” the spokesperson added. “We are working closely with clients focusing on their portfolios and managing risk in the current market environment.”
Federal prosecutors and the US Securities and Exchange Commission have been looking into potential financial improprieties at Walter’s insurance companies and at Guggenheim. The investigation focuses on how Walter, the billionaire owner of the Los Angeles Dodgers, was able to borrow from those insurers without the firms disclosing the loans to state regulators as required.
Bond funds had a rough September as interest rates rose — the Bloomberg US Aggregate Index lost 2.6% during the month. Still, Guggenheim’s redemptions were an outlier among its peers. Investors added $4.6 billion in September to the $1 trillion Intermediate Core Plus Bond category, according to Morningstar.
“It’s not surprising there were outflows given the bond market,” Morningstar analyst Eric Jacobson said in an interview. “But given the absolute change it’s almost certain that the stories that are swirling are having an effect.”
Jacobson maintained his four-star rating of the Guggenheim Total Return Bond Fund in August.
The next largest outflows in the Guggenheim Total Return fund peer group last month were $660.1 million, or 1.7%, from the Fidelity Total Bond Fund; $645.6 million, or 2.2%, from DoubleLine Total Return Bond Fund and $479.7 million, or 1.1%, from the Pimco Total Return Bond Fund, according to Morningstar.
Guggenheim’s 25 mutual funds have about $52 billion collectively, according to data compiled by Bloomberg, about 14% of the firm’s total $367 billion in assets under management.
Written by: John Gittelsohn @Bloomberg
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