Investors pulled another $23.5 billion out of the Pimco Total Return Fund last month as "bond king" Bill Gross stepped down, Pacific Investment Management Co. said Wednesday.
It was the largest monthly outflow ever from the world's largest bond mutual fund.
The most money departed on Friday, the day Gross abruptly announced he was quitting Newport Beach-based Pimco after 43 years to run a small bond fund for Janus Capital Group.
Less money flowed out the first two days of this week, Pimco said in a news release that sought to calm fears of a mass rush for the exits.
"The core fixed-income market in which the Total Return Fund invests is one of the largest and most liquid markets in the world, trading on average $700 billion of securities a day," Pimco said.
"Moreover, the fund is well positioned to meet potential redemptions. Short-term cash management is an area of expertise and strength at Pimco."
That assessment was echoed by bond analysts, who said that, in the near term, the Total Return Fund had many holdings that could easily be sold to pay off the investors cashing out.
The Total Return Fund, a staple of retirement accounts across the country, had already seen major outflows before Gross quit. That was the result of spotty results in recent years at the fund, which had previously done so well that Morningstar named Gross the fund manager of the decade in 2010. Gross had personally managed Total Return.
Morningstar downgraded its rating of Total Return this week from gold to bronze, but said there was no reason for investors to panic about getting their money out.
Scott Burns, Morningstar's global director of manager research, said at least a third of Total Return assets are highly liquid Treasury securities and other holdings that can be easily sold into large markets.
What's more, Burns said in an interview, the fund has substantial additional cash and income from the bonds it owns.
Total Return's net assets peaked at $289 billion at the end of March 2013. By the end of August, the net assets had declined to less than $222 billion.
Although a huge amount, that is dwarfed by the nearly $2 trillion in assets invested in all Pimco's wide range of funds.
Pimco said investors had demonstrated their confidence in the company "as evidenced by significant inflows into strategies such as the Pimco Income Fund," which has seen net inflows of $6.5 billion in 2014.
The hugely successful Pimco Income Fund is headed by Dan Ivascyn, who was named Friday to replace Gross as the firm's chief investment officer.
"As we engage our clients around the world, we are confident that the vast majority of them will continue to stand with Pimco as we demonstrate why we have earned the reputation as one of the world's premier investment managers," the firm said.
Star bond trader Jeffrey Gundlach at DoubleLine in Los Angeles noted that last month's runoff from Total Return amounted to more than 10% of its assets, most of that in the last three days.
"I wouldn't be surprised if that number happens again," he said in an interview.
Gundlach said DoubleLine had net inflows last month of $1.65 billion.
"That money likely came from Pimco," he said, "though we don't know that with certitude."
Times staff writer Tiffany Hsu contributed to this post.