Pimco flagship fund outflows tally $8.6 billion in February

NEW YORK — Pacific Investment Management Co. said investors pulled $8.6 billion from its flagship Total Return Fund last month, a sign the Newport Beach fund manager is still grappling with the fallout from the September departure of its onetime star manager, Bill Gross.

Although February’s withdrawals were within Wall Street expectations, the figure is considered significant, representing 6% of Total Return’s assets at the end of January.

With $124.7 billion in assets at the end of February, the fund that Gross helped to build into global prominence over four decades has fallen 57% from its peak size of about $292.9 billion in April 2013. Still, it’s the world’s largest actively managed bond fund.

On Sept. 26, Gross abruptly quit the company he co-founded, capping a tumultuous year for the firm that began with the surprising resignation of Chief Executive Mohamed El-Erian in January 2014. Gross had clashed with El-Erian and, later, with other executives before he was forced out.

Investors in the Total Return Fund, which Gross had managed, have been pulling out money since returns began sagging from a wrongway bet Gross made on Treasury bonds in 2011. The pace of withdrawals, though, picked up dramatically after he left to join Janus Capital Group.

Outflows hit nearly $18 billion in September and $32 billion in October, according to Morningstar Inc. After slowing in November, they spiked to a record $102.9 billion in December.

The fund had outflows of $12.5 billion in January, according to Morningstar, which uses a different method from Pimco to calculate assets under management.

The outflows came as Total Return posted a 1.9% return for February, beating its benchmark by 0.76 percentage point.

Pimco said that in the last five months, roughly corresponding to Gross’ departure, it has returned 3.25%, outperforming its benchmark by 0.3 percentage point.