Pimco out­flows slow

With­drawals from the bond firm’s To­tal Re­turn Fund tally $2.7 bil­lion in month.

Los Angeles Times - - COMPANY TOWN - By Dean Stark­man dean.stark­man @la­times.com

NEW YORK — In­vestors pulled $2.7 bil­lion from Pimco’s To­tal Re­turn Fund last month, a sign that the worst is over for the f lag­ship bond fund eight months fol­low­ing the de­par­ture of its star manager, Bill Gross.

The New­port Beach bond man­age­ment gi­ant said To­tal Re­turn had $107.3 bil­lion in as­sets as of the end of May, the fifth straight month of slow­ing with­drawals. May’s drop was the small­est since the tu­mul­tuous exit of Gross last fall trig­gered mas­sive outf lows to­tal­ing more than $106 bil­lion.

An­other sign of a re­turn to nor­malcy: Pa­cific In­vest­ment Man­age­ment Co. stopped send­ing out public an­nounce­ments track­ing the outf lows, a prac­tice it had be­gun in the wake of Gross’ de­par­ture, and sim­ply posted the new as­sets un­der man­age­ment fig­ures on its web­site.

One rea­son for the im­prove­ment, an­a­lysts said, has been higher re­turns Pimco has earned by piv­ot­ing from its star-cen­tered sys­tem un­der Gross to a team-ori­ented ap­proach un­der Daniel Ivas­cyn, Gross’ suc­ces­sor as chief in­vest­ment of­fi­cer.

A triad of port­fo­lio man­agers — Scott A. Mather, Mark R. Kiesel and Mi­hir P. Wo­rah — has steered the fund to re­turns of 1.62% in the first four months this year, the lat­est data avail­able. That beat the Bar­clay’s U.S. Ag­gre­gate In­dex by nearly four-tenths of a per­cent­age point, a mar­gin con­sid­ered solid in the in­dus­try.

In­deed, Pimco’s key funds have out­per­formed coun­ter­parts at Janus Cap­i­tal Group Inc., where Gross now works — and that in­cludes a fund run by Gross him­self.

Pimco’s To­tal Re­turn has gained 2.06% since Gross left Sept. 26, which is bet­ter than the 1.5% turned in by its Janus coun­ter­part, the Flex­i­ble Bond Fund, ac­cord­ing to Chicago mu­tual fund re­search firm Morn­ingstar Inc.

Since Oct. 6, when Gross started work­ing at the New­port Beach of­fice of the Den­ver firm, the Global Un­con­strained Bond Fund he runs posted a neg­a­tive 1% re­turn, while Pimco’s ver­sion, also known as Un­con­strained Bond, has re­turned 0.56% in the pe­riod, Morn­ingstar said.

Un­der Gross, Pimco’s closely watched To­tal Re­turn be­came a sta­ple in re­tire­ment funds world­wide. It peaked at $292.8 bil­lion two years ago when man­age­ment tur­moil and pe­ri­ods of un­der­per­for­mance started lead­ing in­vestors to f lee at the rate of an av­er­age of more than $4 bil­lion a month.

Af­ter Gross left, out­flows spiked at $17.8 bil­lion in Septem­ber — most of it in the fi­nal days of the month — hit $32 bil­lion in Oc­to­ber and av­er­aged $16 mil­lion a month from Septem­ber through April.

But the out­flows slowed to $8.9 bil­lion in Fe­bru­ary, $7.3 bil­lion in March and $5.6 bil­lion in April.

Don Bartletti Los An­ge­les Times

PIMCO’S key funds have out­per­formed coun­ter­parts at Janus Cap­i­tal Group Inc., where star manager Bill Gross now works. Above, the head­quar­ters of Pimco.

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