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PIMCO Total Return Outflows Down 65% in November

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The flagship PIMCO Total Return Fund, formerly managed by Bill Gross, had estimated net outflows of $9.7 billion, or nearly 6%, in November, according to Morningstar. Its assets were roughly $163 billion vs. $171 billion at the end of October.

These figures, released Wednesday, excluded non-U.S. versions of the mutual fund and assets held in the Total Return ETF, which is managed by Newport Beach, California-based PIMCO.

Meanwhile, Gross’ new Janus Global Unconstrained Bond Fund added $770 million in November, bringing its assets to $1.2 billion, according to another Morningstar report.

According to PIMCO, the Total Return Fund had outflows of about $9.5 billion. “Outflows from the Total Return Fund continued to slow significantly in November, ending the month 65% lower than flows the previous month,” said Daniel Tarman, a spokesman.

In addition, PIMCO says the fund had an after-fee return of 1%, and excess returns above the benchmark of 0.29% for the month of November, putting it 0.50% above the Morningstar Intermediate-Term Bond Average.

“PIMCO Total Return Fund’s strong absolute and relative returns during the past two months are a testament to our investment process and the talent of our investment professionals. Of course PIMCO is more than the Total Return Fund, and as long-term investors across asset classes, we are therefore pleased that 85% of PIMCO’s U.S. mutual fund assets outperformed their respective benchmarks over the last three years, ”said Daniel Ivascyn, Group Chief Investment Officer, in a statement.

DoubleLine Update

In contrast to the PIMCO Total Return outflows, the DoubleLine Total Return had net inflows of about $804 million in November 2014, the research group says. This fund had almost $39 billion in total assets in November.

Chicago-based Morningstar notes that it estimates net flows by computing the monthly change in assets not explained by the performance of the fund and that actual fund flows may differ from its estimates for “a variety of reasons, including the timing of actual purchases and redemptions versus our assumptions and the timing and type of dividend distributions.”

According to DoubleLine Funds, which has its headquarters in Los Angeles and is led by Jeffrey Gundlach, the fund family had net inflows of $1.16 billion in November, bringing the year-to-date net inflow to $8.62 billion.

The fund group says its DoubleLine Total Return Bond Fund had net inflows of $819 million in November, bringing the fund’s net inflows to $6.43 billion in the first 11 months of 2014. The DoubleLine Total Return Bond Fund, an intermediate-term product, invests primarily in mortgage-backed securities and has $39 billion in assets.

The DoubleLine Core Fixed Income Fund’s inflows were $274 million in November, bringing its net inflows to $1.18 billion year to date; this fund, which invests in different fixed-income sectors, has $2.9 billion in assets.

In contrast to Morningstar’s methodology, DoubleLine says, its figures are based on “the actual net results of fund share subscriptions and redemptions.”

In late November, Gundlach, who serves as DoubleLine’s CEO and chief investment officer, said on CNBC that the Federal Reserve “should not be raising interest rates, and yet they don’t want to be at zero. They’re in a conundrum. They might raise rates just to see what happens.”

When asked about Gross’ departure from PIMCO in late September, which included a discussion with Gundlach before Gross joined Janus Capital, the DoubleLine executive said he had “mixed feelings.”

“I will say one thing, our investors are happy, that [such a partnership] didn’t happen, because they invested in something that they thought they knew,” he said.

“If you make a major organizational change, by bringing in someone with that power and personality, it is understandable that they will ask, ‘What does it mean?’ And the honest answer [about adding Gross] would be, ‘I don’t know.’ I’d like to think it would have been successful [as a partnership], but — as I said at the time — DoubleLine doesn’t need a makeover,” said Gundlach.

Target Date News

In other fund news, Morningstar-owned Ibbotson Associates says that the average target-date fund lost 1.8% during the third quarter, while the S&P 500 rose 1.1% and the Barclays U.S. Aggregate Bond Index improved 0.2% during the period.

For the first three quarters of the year, though, target-date funds have improved 9.1%, underperforming the S&P’s 19.7% jump but outperforming the 4% gain in the bond index.

On a 12-month basis, large-cap growth equities top the list of asset classes in terms of performance, Ibbotson says. This group has improved 19.1%. This group is followed by large-cap value equities at 18.9% and real estate at 13.2%.

In terms of flows, target-date funds drew about $11 billion in assets in the third quarter, a level that is “slightly below” the group’s three-year quarterly average of $13 billion, the research firm says.

The largest inflows went to T. Rowe Price with $3.6 billion, followed by Vanguard with $3.2 billion and JPMorgan with about $2 billion in Q3. Meanwhile, Fidelity’s target-date funds had outflows of close to $4 billion.

Overall, retail target-date funds include some $685 billion in assets as of Oct. 30, down $2 billion from June 30. Collectively, Vanguard, Fidelity and T. Rowe Price manage about 70% of these assets, Ibbotson notes.

— Check out Fall of the Bond King: Gross Lost an Empire as PIMCO Cracked on ThinkAdvisor.


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