The $241 billion PIMCO Total Return, which has underperformed its peers over the past year -- returning 3.48% year to date -- has been hit with $17 billion in outflows, Morningstar data shows. By comparison, taxable bond funds, which are up 5.87% YTD, took in $105.8 billion in inflows over the past 12 months.

“The PIMCO Total Return fund has been seeing a steady stream of outflows,” Kevin McDevitt, Morningstar editorial director told Reuters. “Gross’s fund has underperformed this year, and a lot of it goes back to his misplaced bet on Treasuries.”

Putting the PIMCO Total Return fund in perspective, Jeff Tjornehoj, head of Lipper Americas Research, noted that it ranks in the 90th percentile—at No. 163 out of 181 funds in the category.

Earlier this year, Gross sold U.S. Treasuries, as investors, hungry for safe havens amid the Eurozone crisis and the U.S. Treasury bond downgrade, fled … into U.S. Treasuries—which have turned out as one of the best-performing investments of 2011.

Gross admitted his mistake in his October investors letter, in which he said he was “just having a bad year” and admitted that in light of a potential second worldwide recession, he should not have been so heavily “risk on” but more “risk off.”

Lee Barney writes for Money Management Executive.



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