September 4, 2013

PIMCO Total Return Loses 14% in Four Months

Morningstar estimates net outflow for August was $7.7 billion

Bill Gross, co-CIO, PIMCO (Photo: AP)Thankfully, past performance is no guarantee of future results. It’s just about the only solace Bill Gross (left) can take from the ongoing exodus PIMCO is experiencing.  

Morningstar estimates that net outflow for the PIMCO Total Return Fund alone for August was $7.7 billion, or 2.9% of the $262 billion in assets it held at the end of July.

Total assets in the mutual fund, the world's largest, at the end of August were $251 billion. Estimated year-to-date outflows are $23.3 billion, or 8.2% of year-end 2012 assets.

However, these figures do not include investment losses suffered by the fund. When factored in, Bloomberg puts total losses at 14% in just the past four months.

During that time, investors redeemed $26.4 billion. The fund lost 3.9% this year, trailing 86% of peers, according to data compiled by the news service.

Tough stuff for the fund, which has been hit hard by incorrect Treasury bets and recent news of tapering by the Fed. The missteps have allowed smaller rivals like DoubleLine’s Jeff Gundlach to gain ground.

Douglas Hodge, chief operating officer of PIMCO, recently blamed the financial media, in part, for the bond behemoth’s recent woes.  

"In the aftermath of the financial crisis, the media — which play a large role in setting the tone of the markets and the psyche of investors — went from being cheerleaders for bonds, stressing their virtues and role in maintaining a diversified portfolio, to romancing the notion that bonds are riskier than stocks," Hodge said in a commentary posted to the firm's website on Aug. 27.

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