Record-setting investor withdrawals from Pacific Investment Management Co.'s flagship Total Return Fund slowed in November to $9.5 billion, the giant Newport Beach money manager said Tuesday. Returns, meantime, were strong.
The outflow was about a third of the $27.5 billion that gushed out in October, the first full month after Pimco co-founder and legendary bond investor Bill Gross departed abruptly to oversee a small fund for rival Janus Capital.
Investor withdrawals had totaled $23.5 billion in September, with most of the runoff occurring after Gross quit Sept. 26 as Pimco's chief investment officer.
Gross had overseen Pimco Total Return's rise to become the world's largest actively managed bond fund. The fund, which hit its peak of $289 billion in March 2013, had fallen to $162.8 billion by the end of November — still the largest.
Companywide, Pimco is the world's largest fixed-income manager, overseeing $1.7 trillion in bond investments and nearly $1.9 trillion overall, counting stocks and other assets.
After outperforming rivals for decades, the Total Return Fund had recorded uneven results since 2011, when Gross made a wrong-way bet on Treasury bonds. It had underperformed rivals this year before Gross walked out amid reports that disgruntled Pimco managers were about to fire him.
Now headed by three Pimco managing directors, Total Return recorded a net gain of 1% last month, compared with 0.71% for the benchmark Barclays U.S. Aggregate Bond index, and handily beat the returns of most rivals since Gross' departure.
Daniel J. Ivascyn, who replaced Gross as Pimco's chief investment officer, said the strong recent returns "are a testament to our investment process and the talent of our investment professionals."
The results may help Pimco answer the concerns of some bond analysts who had worried that the outflows might affect performance.
A recent report, released by Wells Fargo Securities analyst Christopher Harris before Pimco's latest disclosure, said: "We may only be halfway through Gross-related redemptions."
"We expect outflows at Pimco to slow — October probably was the high month — but they likely will remain elevated for another eight to 10 months," Harris said.