(Bloomberg) -- Pacific Investment Management Co.’s flagship fund fell below $100 billion in assets for the first time in more than eight years, leaving it with about a third of the money it managed at its 2013 peak.
Investors pulled $1.8 billion last month from the Pimco Total Return Fund. Withdrawals are slowing, as that redemption follows outflows of $2.5 billion in July, $3 billion in June and $2.7 billion in May, according to a statement by the Newport Beach, California-based firm. After 28 consecutive months of outflows, assets plunged to $98.5 billion as of Aug. 31 from a high of $293 billion in April 2013, when the mutual fund was the world’s largest.
This is the first time that Total Return has overseen less than $100 billion since January 2007, before strong returns during the financial crisis spurred an influx of cash from investors seeking the relative safety of bonds. Customers have pulled record amounts of money since April 2013, concerned about the impact of rising interest rates, fluctuating performance and last year’s sudden departure of Bill Gross, the Pimco co-founder who had managed the fund for decades.
Total Return was the largest mutual fund until October 2013. It lost the title of world’s biggest bond fund this April as investors continued the exodus from actively managed products.
The fund, now run by Scott Mather, Mark Kiesel and Mihir Worah, returned 0.6% this year, outperforming 73% of peers as of Sept. 1, according to data compiled by Bloomberg. The fund trailed the majority of its peers in both 2013 and 2014.
Group Chief Investment Officer Dan Ivascyn’s Pimco Income Fund has gathered $9.5 billion in net new client money this year, and assets reached almost $50 billion in August, according to the statement.
That fund, which at the end of July had $48.9 billion, returned 2.6% this year, beating 97% of peers, according to data compiled by Bloomberg. It’s ranked in the top percentile against its rivals over the past three and five years, the data show.
Pimco Chief Executive Officer Douglas Hodge has said investors are returning to Pimco as uncertainty about the firm abates. The “trajectory of flows has changed significantly over the last nine months,” Hodge said in June at the Morningstar Investment Conference in Chicago. Flows now reflect investors searching for strategies that will better weather a rising interest-rate environment than a core fixed-income fund, Pimco has said.
The Vanguard Total Bond Market Index Fund, a passive product tracking a broad fixed-income benchmark, is now the industry’s biggest bond fund, with $118.4 billion in assets at the end of July. That fund has gained 0.5 % this year, ahead of 64% of peers.
Gross, who co-founded Pimco in 1971 and built it into one of the world’s largest investment firms, departed for Denver- based Janus Capital Group Inc. on Sept. 26 after losing a power struggle. He now runs the $1.47 billion Janus Global Unconstrained Bond Fund, which has declined 1.8% this year, besting 52% of its peers.
Pimco had $1.52 trillion under management as of June 30, down from about $2 trillion in 2013.
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access