Pimco sees $48-billion outflow in October
NEW YORK — Pacific Investment Management Co. saw a total of $48 billion flow out of all of its funds in October, including $6 billion from funds not associated with its departed star manager, Bill Gross.
Research firm Morningstar Inc. said the outflows ranged across the dozens of funds that use diverse fixed-income strategies. The $32 billion that Morningstar said left the Gross-managed flagship Total Return Fund dwarfed the others.
Gross, who resigned abruptly Sept. 26, also managed a handful of smaller funds that experienced outflows as well. In all, Morningstar said, $42 billion left accounts associated with Gross, and the rest of the outflow was from funds managed by others.
Morningstar’s fund-flows count for October includes the last day of September, which in this case would tilt the total upward because the bulk of Pimco’s outflows occurred immediately after Gross’ departure and tapered through October. For last month only, Pimco itself reported Wednesday that investors pulled $27.5 billion from Total Return.
The money taken from Pimco funds, though of major concern to the Newport Beach company, is a small amount compared with the total $1.8 trillion in assets it manages.
In a statement Thursday, Pimco Chief Executive Douglas Hodge said the firm’s performance has held up well, despite the turmoil.
“Given October’s market volatility and the firm’s recent [chief investment officer] succession, Pimco’s investment performance during the month is noteworthy and attributable to the strength and contribution of the firm’s large portfolio management team,” he said.
Much of the outflow was part of the post-Gross fallout, including $3 billion from one of Pimco’s so-called unconstrained funds, which aren’t tied to a single fixed-income sector.
Still, the drain on Pimco funds hits as investors already are nervous about bonds in general. The Federal Reserve ended its massive bond-buying campaign and is expected sometime next year to begin raising interest rates, both moves putting downward pressure on bond prices.
Pimco’s rough October stood in contrast with that of key, but much smaller, rivals, which saw billions of dollars flowing in. For instance, MetWest Total Return Fund, run by TCW Group Inc. in Los Angeles, saw assets grow more than 57% to $40.5 billion from $25.7 billion over the last 12 months.
