Pimco Total Return Fund, the biggest fixed-income mutual fund in the world, suffered from investor withdrawals for the fourteenth straight month in June 2014. Assets dropped by 4.5 billion dollars, despite Pimco posting a better performance over the second fiscal quarter than many of its competitors.
“Patient investors are rewarded over the long-term by sticking with core bond allocations in a diversified portfolio. The PIMCO Total Return fund has outperformed its benchmark and a majority of its peers over the last 1, 3, 5, 10 and 15 years,” Mark Porterfield, Pimco spokesman, said in an e-mailed statement, which was cited by Bloomberg.
The outflow for June 2014 represents 2% of the funds assets as of the end of May 2014, and is the largest loss on a monthly basis for Pimco since September 2013, fund tracker Morningstar reported. Net investor redemptions that amounted to $4.5 billion in June have reduced its assets to $225.2 billion, while a year ago they stood at $293 billion.
Mohamed El-Erian, suggested as a possible successor to Mr. Gross, quit as chief executive and co-chief investment officer earlier this year – a move which weighed on investors sentiment and is considered a major incentive for the growing outflows.
“The convergence of management issues and poor performance was the double-whammy that caused persistent outflows,” Jeff Tjornehoj, head of Lipper Americas Research, said for the Wall Street Journal. It is “too early to signal a turnaround” for the fund even with the strong second-quarter return, he added.
Total Return remains the worlds biggest bond fund by assets, while Pimco manages $1.94 trillion in global assets as part of Germanys Allianz SE.
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