Gross’s Total Return Fund Drew $2.1 Billion Last Month

Bill Gross’s Pimco Total Return Fund, the world’s biggest mutual fund, attracted $2.1 billion last month and deposits into his exchange-traded fund, which mimics the flagship mutual fund’s strategy, reached the highest since the fund started.

The seventh straight month of net deposits into the mutual fund contributed to $8 billion in new cash for the year through July 31, Chicago-based Morningstar Inc. said today. Pimco Total Return Exchange-Traded Fund attracted $557 million in its best month ever, leading to $2.1 billion in total deposits since the the fund started trading on the NYSE Arca exchange on March 1.

Pimco Total Return ETF gained 8.3 percent through yesterday’s close, almost twice the 4.7 percent return for the $263 billion mutual fund, according to data compiled by Bloomberg. Because the ETF is still much smaller than the mutual fund, it can snap up notes with the biggest potential returns.

Pimco Total Return Fund, while trailing its ETF version, is outperforming 98 percent of similarly managed mutual funds this year and over five years, the data show.

Unlike the mutual fund, which uses a combination of options, futures and swap agreements, Gross’s ETF can’t invest in derivatives because the U.S. Securities and Exchange Commission has frozen approval of new ETFs that make significant use of the instruments. Should the SEC lift the temporary ban, the Total Return ETF would invest in derivatives, Pimco said in its filing last year.

Pimco, based in Newport Beach, California, is a unit of the Munich-based insurer Allianz SE.

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