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Pimco Says Total Return Exceeded Morningstar’s Estimate

Pacific Investment Management Co. said Morningstar Inc. (MORN) significantly underestimated March investor deposits into Pimco Total Return, the world’s biggest mutual fund.

The $289 billion fund, run by Pimco co-founder Bill Gross, attracted $723 million last month, Mark Porterfield, a Pimco spokesman, said today. Morningstar, the Chicago-based research firm best known for its star ratings of funds, last week estimated that Total Return gathered $32 million. Morningstar stood by its methodology and said it normally results in more accurate estimates.

“It’s important to understand that our number is an estimate and will not always exactly track a fund company’s internal calculations due to the timing and magnitude of intra- month redemptions and subscriptions,” Carling Spelhaug, a Morningstar spokeswoman, said in an e-mailed statement. “Pimco, of course, knows exactly what its actual daily flows are, but does not share this data externally so it’s not possible for us to explain with any certainty why there is a discrepancy between our estimate and their actuals.”

Total Return is considered a bellwether for global bond investor sentiment. The fund has returned an annual average of 7.8 percent over the past five years, beating 93 percent of competing funds, according to data compiled by Bloomberg, and its growth helped propel Newport Beach, California-based Pimco to $2 trillion in assets.

Jeff Tjornehoj, head of Americas research at Denver-based research firm Lipper, said his company estimated March deposits for Total Return at $247.6 million.

Managers typically don’t publish figures for withdrawals and deposits at individual mutual funds. Research firms estimate flows using total assets at the beginning and end of a given period and fund returns for that span.

Bloomberg LP, the parent of Bloomberg News, competes with Morningstar and Lipper in providing financial market data.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

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