Gross on Track to Run Biggest Mutual Fund in History

As investors ran from stock funds and sought the safety of bond funds this year, PIMCO’s Total Return fund ballooned to $199 billion in assets, and should its heady inflows continue at this pace, the fund will soon top the $202.3 billion record sister fund Growth Fund of America set in 2007, Bloomberg reports.

Part of the reason for investors’ overwhelming choice of this fund, run by Bill Gross, is its remarkable 4.8% return last year, compared with the 37% plummet in the Standard & Poor’s 500 Index, not to mention that every fund sector and virtually every stock fund was in the red. Since its inception in 1987, Total Return has delivered an average annual return of 8.5%.

Year-to-date through October, Total Return attracted $42 billion of new cash, four times more than any other U.S. mutual fund, according to Morningstar data. This one fund accounted for more than 14% of the $297 billion that investors added to all bond funds in that time. By comparison, equity funds attracted $12 billion in the first 10 months of the year.

“Last year was a time when many funds got burned, but the biggest fund of all did fine,” noted Russel Kinnel, director of mutual fund research at Morningstar. Morningstar Director of Fixed Income Research Eric Jacobson added, “It’s a rare trait to manage at that level.”