Pimco Total Return Fund Redemptions Reach 30 Consecutive Monthsby
Monthly withdrawals lowest since prior to Bill Gross's exit
Income Fund tops $50 billion with $11.5 billion 2015 inflow
Redemptions at the Pimco Total Return Fund reached 30 straight months in October as the former world’s largest mutual fund fell to $93.7 billion in assets.
The Pimco Income Fund continues to head in the other direction, surpassing $50 billion in assets for the first time as group Chief Investment Officer Daniel Ivascyn’s pool has attracted $11.5 billion in net new cash this year, according to Newport Beach, California-based Pacific Investment Management Co.
“The Income Fund benefited from defensive positioning in the energy sectors and the recovery in the higher quality segments of the emerging markets,” Ivascyn said.
Total Return is less than a third of its peak size as investors pulled $1.6 billion from the fund in October, the smallest monthly outflow since July 2014, two months before Pimco’s ouster of co-founder Bill Gross prompted a rush to the exits. The fund peaked at about $293 billion in April 2013, shortly before Federal Reserve policy makers sparked the so-called taper tantrum by threatening to reduce their investments in Treasuries and mortgage-backed securities, prompting investors to flee bonds.
The Total Return Fund returned 1 percent this year through Nov. 2, outperforming 74 percent of its peers, according to data compiled by Bloomberg.
“We took advantage of market pricing that reflected extreme worry about spillovers from China and global deflation in September,” said Scott Mather, a manager on Total Return and Pimco’s CIO for core strategies. “As markets calmed and reassessed the probabilities with new data in October, our positions in corporate credit, mortgages and Treasuries benefited.”
The $51 billion Pimco Income Fund has returned 3.6 percent in 2015, beating 98 percent of peers. It ranks in the 99th percentile for the three- and five-year periods.
While Pimco Total Return has lost assets, investors have added money to competitors such as TCW’s Metropolitan West Total Return Bond Fund and the DoubleLine Total Return Bond Fund. DoubleLine’s fund has returned 2.6 percent this year, outperforming 93 percent of peers, while the MetWest fund is up 0.6 percent, besting 45 percent of peers.