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Gross’s Fund Had Redemptions of $3.7 Billion in November

Dec. 3 (Bloomberg) -- Bill Gross’s Pimco Total Return Fund, which lost its title as the world’s largest mutual fund in October, had its seventh straight month of withdrawals in November as investors continued to flee bonds.

Clients pulled an estimated $3.7 billion from Pacific Investment Management Co.’s Total Return Fund last month, leaving it with assets of $244 billion at the end of November, Chicago-based research firm Morningstar Inc. said today in an e-mailed statement. Net redemptions for the fund this year through Nov. 30 are estimated at $36.9 billion, Morningstar said, on track to be the most ever for a calendar year.

Investors are pulling money out of traditional fixed-income funds in anticipation that the three-decade rally in bonds is ending, and adding to stock funds, particularly low-cost index funds, as the bull market in U.S. equities is in its fifth year. U.S. bond mutual funds saw net redemptions of $133 billion in the five months through October, while stock funds received $56 billion in that period, according to the Investment Company Institute in Washington.

“Even in a rising rate environment, there are opportunities in the bond market for long-term investors who understand the benefits of maintaining a diversified portfolio,” Mark Porterfield, a spokesman for Newport Beach, California-based Pimco, said today in an e-mailed statement. “Fixed income should be a part of a well-balanced investment portfolio.”

Fund Performance

Pimco Total Return Fund advanced 7.9 percent annually over the past five years, ahead of 71 percent of rivals, according to data compiled by Bloomberg. This year, the fund fell 1.2 percent, in line with 50 percent of similarly managed funds. Gross’s fund became the biggest mutual fund in 2008, before ceding the title to Vanguard Total Stock Market Index Fund two months ago.

The withdrawals from Pimco Total Return Fund in November were the lowest since May, when investors pulled an estimated $1.3 billion, based on Morningstar data.

To contact the reporter on this story: Alexis Leondis in New York at aleondis@bloomberg.net

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

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