Bond investors - setting sun The darkest hour may be just before the dawn - but the brightest part of the day is not immediately before sunset. It is for investors, though, who regularly pile into an asset class in maximum numbers just before the turn. This sometimes means that, in aggregate, more money is lost soon after a crash than was made during a much longer period of good times. Has that happened with this latest brutal move in bond markets? It is difficult to determine the fate of the so-called average investor, as fund performance numbers usually blur investment returns with inflows and outflows. What we do know for sure is that up until mid-May money was still pouring into bonds. Indeed the first two weeks of that month had the biggest inflow of money into all bond funds globally for a year and a half, according to EPFR Global data. And the month of May had a third more inflows than the average month since 2009 in spite of the fact that bond prices had begun falling. That all changed in June, however, with about $100bn leaving bond funds worldwide. That equates to about 2 per cent of total assets at the end of May. But we also know from the data that net asset values fell by closer to 5 per cent. The difference is due to investment returns and that is the part being suffered by those who bought in at the top and have not sold. A similar trend, but amplified, can be seen in the likes of emerging markets bonds. June witnessed absolutely huge outflows accounting for roughly half of the decline in total assets so far. But this is not yet a routing of the average investor. That is because inflows have been generally high into all types of bond funds for many years - with steady if not increasing investment returns helped latterly by global quantitative easing. Indeed what makes this situation so scary is that the majority of investors may yet decide to quit while they are ahead. They all can't.