PIMCO Outflows Slow, Firm Hires ‘Distressed Credit’ Manager

The flagship Total Return Fund has had some $60 billion in net outflows in 15 months

About $16.5 billion has left the PIMCO Total Return Fund year to date. About $16.5 billion has left the PIMCO Total Return Fund year to date.

Morningstar says the flagship PIMCO Total Return Fund (PTTRX) had net outflows of $830 million in July 2014, or 0.4% of June-ending assets of $225 billion; total assets in the fund as of July 31 are estimated to be $223 billion.

This brings the fund’s year-to-date outflows to about $16.5 billion, and the July estimate means the fund has had outflows for 15 months in a row, for a total of more than $60 billion.

Still, the level of outflows is down considerably from May and June — when it shed $4.3 billion and $4.5 billion respectively. In fact, the latest figure is the first monthly outflow level of under $1 billion since the fixed-income shop got into trouble in the spring of 2013.

There was more good news for the group, which is led by Bill Gross: the PIMCO Total Return ETF (BOND) attracted $43 million last month, giving it about $3.5 billion in assets. In June, it had inflows of $233 million. (These July figures do not include non-U.S. versions of the fund or the ETF, notes Morningstar.)

“A core bond allocation remains an important part of a diversified portfolio, to generate returns and manage risk over the long term,” a PIMCO spokesperson said in a statement shared with Bloomberg earlier this week. “More broadly, PIMCO’s assets under management grew $53 billion this year, and 94% of the firm’s AUM outperformed its five-year benchmark.”

As for the rival DoubleLine Total Return Fund DBLTX, DLTNX), Morningstar says it had estimated inflows of $328 million in July and total assets of $34 billion.

Morningstar estimates open-end fund net flows by computing from one month to the next the change in assets that is not explained by the performance of the fund. A fund’s actual flows may differ from these estimates for a variety of reasons, it says, including the timing of actual purchases and redemptions versus assumptions made in the calculations and the timing and type of dividend distributions.

DoubleLine says that, according to “the actual net results of fund share subscriptions and redemptions,” its total-return fund had inflows of $375.3 million. The fund shop notes that it had overall inflows of $603.2 million in July vs. Morningstar’s estimated $560 million.

Furthermore, DoubleLine’s Total Return Bond Fund has had year-to-date inflows totaling $1.9 billion, it says, and more than $2.7 billion of net inflows into DoubleLine open-end funds.

Management Shuffles

On Tuesday, PIMCO said it hired Ethan Schwartz to serve as an executive vice president and portfolio manager focusing on distressed credit. Formerly, Schwartz was a senior analyst at Contrarian Capital Management.

"PIMCO has strong capabilities in distressed debt and opportunistic credit investing, and Ethan's hiring is another example of the firm's continued focus on further enhancing our investment platform outside of traditional markets," said Sai Devabhaktuni, executive vice president and head of corporate distressed portfolio management.

Schwartz has been in the business for 15 years. At Contrarian Capital, he helped oversee $2.7 billion of hedge-fund assets and was a member of the investment committee of the illiquid distressed fund. He also worked at CRT Capital Group, Tribeca Investments and Goldman Sachs.

Prior to his investment career, Schwartz was a professional journalist.

After the news of then-CEO Mohamed El-Erian’s departure earlier this year, PIMCO tapped COO Douglas Hodge for this leadership role. It also appointed six deputy chief investment officers.

In May, the bond shop rehired Paul McCulley to serve as a managing director and take on a new role as the group’s chief economist. McCulley, who worked for the firm from 1990 to 1992 and 1999 to 2010, also became a member of PIMCO’s Investment Committee; he reports directly to founder and Chief Investment Officer Bill Gross.

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Check out PIMCO’s Gross Fights for the 1% (of ‘Excess Return’) in a 4%-5% World on ThinkAdvisor.

 

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