By Kirsten Grind
Investors pulled roughly $8.6 billion from Pacific Investment
Management Co.'s flagship Total Return fund in February, the lowest
amount of monthly withdrawals since the abrupt departure last fall
of star manager Bill Gross.
The new outflows were lower than the $11.6 billion that exited
in January, according to the company, as Pimco's flagship fund
shows signs of stabilizing.
But February was the 22nd consecutive month of withdrawals for
the world's largest bond mutual fund, which is now down 57% from
its peak of $293 billion in April 2013. The Total Return Fund had
$124.7 billion in assets at the end of February.
"Clearly it is going to take some time before the outflows
stop," said Timothy Strauts, a senior analyst with fund research
firm Morningstar Inc. "Best case scenario for them is that it
continues to trend downward."
Pimco, based in Newport Beach, Calif., has been scrambling to
keep investors following months of internal strife and the
acrimonious departure of Mr. Gross at the end of September. Pimco,
a unit of German insurer Allianz SE, also lost its chief executive
Mohamed El-Erian last year after clashes with Mr. Gross.
Outflows from the Total Return fund are expected to vary from
month to month, but in early December one of three new Total Return
managers said the firm had moved past the "knee-jerk reaction in
terms of flows that you would expect to happen."
The slowdown in withdrawals during February came as Total Return
posted strong performance as compared with rivals. The fund earned
a return of 1.9%, after fees, for the year to date through the end
of February and 3.25% for the five months ending Feb. 28, beating
the Morningstar Intermediate Term Bond Average and the company's
internal benchmarks.
"If they continue to perform well investors may realize it
wasn't only Bill Gross managing the fund," said Mr. Strauts of
Morningstar. "The last few years he had a whole team behind him and
most of those people are still in place."
Write to Kirsten Grind at kirsten.grind@wsj.com
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