Pimco Total Return Outflows Slow to Lowest Since Gross Exit

  • Investors pulled $1.5 billion from flagship during November
  • Daniel Ivascyn's Income Fund has added $13 billion in 2015

Investors pulled $1.5 billion from the Pimco Total Return Fund in November, the smallest outflow since before the September 2014 ouster of Bill Gross.

The Pimco Income Fund continued to lead new investment, adding more than $1 billion last month and $13 billion this year, Newport Beach, California-based Pacific Investment Management Co. said Wednesday. Run by Daniel Ivascyn, who replaced Gross as the firm’s chief investment officer, the $52.4 billion fund has gained 3.5 percent in 2015, outperforming 98 percent of peers by betting on mortgages without government guarantees while mostly avoiding money-losing sectors such as energy bonds and emerging-market currencies.

“We’ve seen steady stabilization in terms of flows and on the investment performance side have been pleased with the work of the team,” Ivascyn said in a telephone interview. “If we can keep up the performance we’ve seen in the last few months, we’ll be in very good shape.”

The Pimco Total Return Fund, whose assets peaked at $293 billion in April 2013, fell to $91.9 billion as of Nov. 30 after its 31st straight month of redemptions. The fund, now run by Scott Mather, Mihir Worah and Mark Kiesel, has returned about 1.3 percent this year, beating 81 percent of peers, according to data compiled by Bloomberg.

Outflows at Total Return began in May 2013 after the Federal Reserve telegraphed plans to reduce the bond buying that had kept U.S. interest rates low. The redemptions spiked in the last quarter of 2014 after a power struggle led to the ouster of Gross, who left to join Janus Capital Group Inc.

“We’ve felt for some time that markets were being overly pessimistic about the Fed’s chances of successfully reflating the U.S. economy and beginning the normalization process,” Mather, the firm’s CIO for core strategies, said Wednesday. “Our positions in November benefited as inflation expectations and monetary policy divergence themes became more realistically priced.”

The firm reported more than 25 funds had inflows in November, but didn’t say whether total flows remained positive. In October, Pimco’s net inflows were about 400 million euros ($425 million), reversing 28 consecutive months of losses, according to a Nov. 24 presentation.

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