Pimco outflows slow
Withdrawals from the bond firm’s Total Return Fund tally $2.7 billion in month.
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.
PIMCO’S key funds have outperformed counterparts at Janus Capital Group Inc., where star manager Bill Gross now works. Above, the headquarters of Pimco.