$247B Pimco Total Return knocked off its perch as biggest mutual fund

Thanks to the stock market rally, among other things, the $287 billion Vanguard Total Stock Market Index Fund has surpassed the $247 billion Bill Gross' Pimco Total Return Fund as the largest mutual fund. At least for now.
DEC 03, 2013
For the first time since the financial crisis, a stock fund is once again the largest mutual fund. The $287 billion Vanguard Total Stock Market Index Fund (VTSMX) surpassed the $247 billion Pimco Total Return Fund (PTTAX) as the largest mutual fund as of the end of October, according to Morningstar Inc. Vanguard now manages three of the four largest mutual funds, including the $153 billion Vanguard Institutional Index (VINIX) and the $150 billion Vanguard 500 Index Fund (VFINX). "It’s indicative of the popularity of low-cost passive investing,” said Mike Rawson, analyst at Morningstar, referring to Vanguard's dominance at the top. Vanguard's funds have benefited both from the stock market's now five-year-long bull market and the shift to passive investing. “Our core index funds have been particularly popular, given their broad exposure and low costs,” spokeswoman Katie Henderson said. The Total Stock Market Fund invests across the entire U.S. stock market, has a trailing five-year annualized return of 16% and year-to-date inflows of just over $20 billion through Oct 31. Its 0.05% expense ratio also ranks it among the lowest-cost funds available. Overall, Vanguard's funds have had $54 billion of inflows through the first three quarters of the year, more than three times the amount of Dimensional Fund Advisors, the next-best-selling mutual fund company, according to Morningstar. Pimco Total Return, managed by bond guru Bill Gross, has been hit hard this year by investor redemptions amid a challenging fixed-income environment. Since June, when interest rates began to rise, investors have pulled almost $35 billion out of the fund, including $4.4 billion in October, marking its sixth straight month of net outflows. Mr. Gross' fund hasn't been alone in watching investors flee, though. Since June, investors have pulled a net $140 billion out of bond funds, according to TrimTabs Investment Research. And the big money manager is not sitting idly by. Pimco is making a renewed push into equities. Last week the Newport Beach, Calif.-based company hired Schroders PLC veteran Virginie Maisonneuve as its new global head of equities.

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