Looks like PIMCO needs a goalie like Tim Howard of Team USA to save it from bad news.
Despite the rehiring of Paul McCulley, the bond shop continues to experience investment outflows, according to Morningstar. U.S. investors pulled some $4.5 billion out of the PIMCO Total Return Fund in June, the research firm estimates. That’s about 2% of its roughly $229 billion of assets in May, leaving it with some $225 billion.
There was a bit of good news: the PIMCO Total Return ETF (BOND) pulled in $33 million last month, giving it about $3.4 billion in assets.
“Things were getting less and less severe for a while, but the past two months were worse than expected,” said Michael Rawson, a fund analyst with Morningstar in Chicago, in an interview. “There’s no real negative news from PIMCO, and investors are buying funds in the [intermediate-bond] category. This has got to be a bit disconcerting for PIMCO.”
Indeed. This brings the tally of outflows to 14 months. (That’s just one less than the number of goals blocked by Howard in the match against Belgium on Tuesday.)
“Marginally, the outflows [are getting] worse, so this is a bit surprising – with the fund category getting better,” Rawson said. “Investors are less concerned with interest rates than last year, and I am surprised [with the recent outflows], given the recent hiring of McCulley. It’s surprising that the outflows haven’t stabilized a bit.”
Made in the Shade?
News of the outflows might not be a big shock to those following Morningstar’s major fund conference, which took place in June. PIMCO co-founder Bill Gross addressed the crowd, but in an unusual way, wearing sunglasses and proclaiming himself “one cool dude.” His remarks left many members of the audience somewhat confused.
This performance came about six months after the departure of then-PIMCO CEO Mohamed El-Erian and the frenzy it created as tensions between the two played out in the media.