Pimco Total Return Fund Snaps Four-Year Streak of Outflows

  • Redemptions since 2013 fueled by ‘taper tantrum,’ Gross exit
  • Fund is beating 88% of peers this year, 75% over three years

Pimco Total Return Fund, once the world’s largest mutual fund, got its first monthly inflow in more than four years as strong performance attracted investor cash.

The fund saw preliminary net inflows of $348 million, not including reinvested dividends, last month, according to a person with knowledge of the fund. That brought total assets to $74.7 billion as of Aug. 31.

The increase was the first since April 2013, when assets peaked at $293 billion. Since then, they have plunged almost 75 percent. The decline was driven in part by the market’s so-called taper tantrum, which began in May 2013 when investors fled bonds on concern that U.S. interest rates would rise.

Total Return’s redemptions later surged in September 2014, when Pimco ousted Chief Investment Officer Bill Gross, who started the fund in 1987 and oversaw its growth while posting some of the industry’s best long-term returns. Investors withdrew a net $32.3 billion in October 2014 alone.

Scott Mather, Mark Kiesel and Mihir Worah took over the fund’s management after Gross’s departure. Its average annual returns in the three years through Aug. 31 were 3 percent, better than 75 percent of its Bloomberg peer group. This year through August, the fund’s 5.3 percent return beat 88 percent of competitors.

Pimco Income Fund, overseen by Dan Ivascyn and Alfred Murata, received $3.1 billion in net inflows in August, with assets climbing to $96.4 billion, according to the person. The income fund has averaged 7.6 percent returns and outperformed 99 percent of its Bloomberg peers over the past five years.

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