Pimco Total Return outflows slow as performance picks up

Investors pull just $9.5 billion from flagship fund after $32B drawdown in October.
DEC 18, 2014
The Pimco Total Return Fund (PTTAX) logged its 19th consecutive month of redemptions in November, as the world's largest bond investment continues to suffer from the loss of star manager Bill Gross. On Tuesday, Pimco spokesman Daniel Tarman downplayed the outflows, saying in a statement that redemptions “continued to slow significantly.” The $9.5 billion in redemptions last month are down sharply from the $32 billion investors took out of the fund in October. The fund also turned in strong performance in November after a mixed year. (More: Bill Gross speaks out on Pimco exit, vows to regain crown at Janus Capital Group.) The fund's institutional share class (PTTRX) ranked in the top percentile among its competitors, returning 1%, compared with the Barclays U.S. Aggregate Bond Index, a widely-watched measure, which returned 0.71%. Over the last year, PTTRX ranks in the 76th percentile among competitors. The fund has been managed by a set of former affiliates of Mr. Gross since his abrupt Sept. 26 departure for Janus Capital Group Inc.. The Total Return Fund's more than $128 billion in total outflows since May 2013 started after fears of a change in central bank policy and continued as whispers of management tension followed the subsequent departure of senior executives, including Mr. Gross' heir apparent, Mohamed El-Erian. (More: El-Erian resigns as CEO of Pimco.) Those developments set off a flurry of competition among bond fund managers including the TCW Group Inc.'s MetWest unit, DoubleLine and BlackRock Inc. to attract billions in newly homeless investor money. Analysts have said the firm could still maintain its top-flight status even if billions more flow out. In recent weeks, Pimco has announced new hires and as well as a new bonus package for employees, which include one of the world's largest corps of fixed-income specialists. Quelling some investor fears, the firm also estimated the capital gains tax distributions on the Total Return Fund will be fairly limited. Pimco didn't comment on overall flows at the firm, though Morningstar Inc. estimated last month the firm's lineup lost $48 billion in all. Nearly three quarters of the firm's 78 U.S. mutual funds tracked by Morningstar experienced outflows in October.

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