Assets at Pimco, the second-largest U.S. fixed-income manager, climbed to $1.61 trillion as of June 30, the biggest quarterly increase since the 2014 ouster of co-founder Bill Gross prompted a flood of withdrawals.

Pimco’s assets under management climbed about $100 billion from $1.51 trillion as of March 31, according to information posted on the Newport Beach, California-based firm’s website after markets closed on Thursday. They climbed about $70 billion in the first quarter of 2016, previously the highest post-Gross gain. Pimco didn’t disclose information on the share attributable to flows or performance.

Risk-retention requirements have had a “chilling effect” on the market for mortgage bonds that lack a government guarantee, Pimco said.
Investors added over $15 billion this year through June to the Pimco Income Fund. Bloomberg News

Actively managed bond funds have had a better record of holding market share in recent years than actively run stock funds, which have been losing ground to lower-fee passive fund managers.

Investors “are still funneling a lot of money into active bond funds, which is a big difference from U.S. equity, where active flows are negative,” said Morningstar analyst Alina Lamy.

Actively managed taxable bond funds in the U.S. had net inflows of $91.3 billion in the first half of this year, compared with $110.4 billion in new investments to passively managed bond funds, according to Morningstar data.

Pimco’s assets peaked at about $2 trillion in the first quarter of 2013, before concerns about rising interest rates led to withdrawals. Outflows surged in the fourth quarter of 2014, immediately after Gross was ousted. Assets plunged to $1.43 trillion at the end of 2015.

Investors added more than $15 billion this year through June to the Pimco Income Fund (PONAX), co-managed by Dan Ivascyn and Alfred Murata, according to estimates compiled by Bloomberg. The fund, which has beaten 99% of its peers over the past five years, became the largest actively managed fixed-income fund in March.

Biggest fund flows year-to-date
Passive investments garnered most of the investor cash so far in 2017, but beyond that it was a wide net: S&P 500, small cap, emerging markets, fixed income — anything that could be structured as an ETF.

Pimco Total Return (PTTRX), the fund founded by Gross and once the world’s largest mutual fund, has continued to experience outflows, with assets dropping to $73.3 billion as of June 30 from a high of $293 billion in April 2013, according to data compiled by Bloomberg.

Bloomberg News