Bill Gross’s Pimco Total Return Fund had $830 million of net investor withdrawals in July, the smallest month since redemptions began in May 2013, when clients began pulling money from the world’s biggest bond fund as performance faltered, according to Morningstar Inc.
The fund, run by Pacific Investment Management Co. in Newport Beach, California, has total assets of $223 billion, Chicago-based researcher Morningstar said in a statement. That’s down from $293 billion last year.
Gross, 70, has sought to stanch redemptions and reassure investors, telling clients Pimco funds will again rank at the top by year-end. He’s been undermined this year by bets on shorter-term debt, trailing 89 percent of his peers in July, as his deputies outperform. Pimco is betting on a “new neutral” era characterized by global growth converging toward lower, more stable speeds and interest rates that remain below their pre-crisis equilibrium.
The formerly top-ranked fund has seen its five-year ranking slip to the 62nd percentile, according to data compiled by Bloomberg. Total Return climbed 3.6 percent this year, trailing 55 percent of its peers. Investors pulled a record $41.1 billion from the fund last year, according to Morningstar.
“A core bond allocation remains an important part of a diversified portfolio, to generate returns and manage risk over the long-term,” Mark Porterfield, a spokesman for Pimco, said in an e-mail. “More broadly, Pimco’s assets under management grew $53 billion this year and 94% of the firm’s AUM outperformed its five-year benchmark.”
Investors started pulling money from the fund in May 2013 when the Federal Reserve first hinted it would unwind stimulus measures, sparking concern that rising interest rates would create losses in bond funds.
Morningstar estimates deposits or withdrawals for mutual funds by computing the change in assets on a monthly basis that isn’t accounted for by performance. The fund’s actual withdrawals or deposits may differ from Morningstar’s estimates because of the timing of purchases and redemptions or dividend distributions.
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