Investors pulled $2.5 billion from Pacific Investment Management Co.’s flagship fund in July, the 27th consecutive month of outflows from what used to be the world’s largest mutual fund.
The July withdrawals from the Pimco Total Return Fund compare with $3 billion in redemptions in June, $2.7 billion in May, and $5.6 billion in April, according to the Newport Beach, California-based firm. The fund’s assets have plunged to $101 billion, from a high of $293 billion in April 2013.
Investors took out record amounts of money amid concerns about lackluster returns, rising interest rates and the sudden departure last year of Bill Gross, the Pimco co-founder who managed Total Return. The fund, which is now run by Scott Mather, Mark Kiesel and Mihir Worah, has returned 1.6 percent this year, outperforming 93 percent of peers, according to data compiled by Bloomberg.
“In the face of falling developed market sovereign yields, the fund’s interest rate strategies were neutral for performance,” as bets on the euro area offset an underweighting on longer-term bonds, Pimco said Tuesday in a statement. “Spread sector strategies and the fund’s long-dollar positions broadly added to performance as spreads widened and the dollar rallied.”
Chief Executive Officer Douglas Hodge has said investors are returning to Pimco as uncertainty abates. The “trajectory of flows has changed significantly over the last nine months,” Hodge said in June at the Morningstar Investment Conference in Chicago. More than 40 of its funds saw net new client money in July, the firm said in today’s statement.
Flows now reflect investors searching for strategies that will better weather a rising interest-rate environment than a core fixed-income fund, Pimco has said.
Pimco Income Fund, run by group Chief Investment Officer Daniel Ivascyn, attracted $1.4 billion in July, according to the statement. Its June subscriptions were the most for any active fund, and this year it’s pulled in more new client money than any in its category, the firm said, citing data from Morningstar Inc.
That fund, which at the end of June had $47.4 billion in assets, has returned 3.4 percent this year, beating 99 percent of peers, according to data compiled by Bloomberg. It’s ranked in the top percentile against its peers over the past three and five years, too, the data show.
The Vanguard Total Bond Market Index Fund, a passive product tracking a broad fixed-income benchmark, is now the world’s biggest bond fund with $117 billion in assets at the end of June. That fund has gained 0.8 percent this year.
Gross, who co-founded Pimco in 1971 and built it into one of the world’s largest investment firms, departed for Denver-based Janus Capital Group Inc. on Sept. 26 after losing a power struggle. He now runs the $1.45 billion Janus Global Unconstrained Bond Fund.
Pimco had $1.52 trillion under management as of June 30, down from a high of about $2 trillion in 2013.