Flows vs. performance

Investors choose funds on the basis of a good long-term track record and outperformance. However, poor performance, and market movements are just some of the reasons investors can change their minds. But how much does long-term performance influence the short-term flows into and out of funds?

In this series, our Citywire examines the link between the three-year performance of a fund against its Citywire-assigned benchmark and compares it with the amount of money attracted between January 2017 and the end of June 2017.

Using Citywire data, this gallery showcases which cross-border funds at US investment firm Pimco saw the biggest inflows and outflows in the first half of the year. Let’s see if a fund’s popularity mirrors its performance.

Note: Flows figures based on Citywire data to the end of June 2017. Performance based on Lipper data compared to a Citywire-assigned benchmark over the three-year period covering September 2014-September 2017.

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Pimco GIS Income

Net flows: $21.1 billion

The $54.5 billion Pimco GIS Income fund has had the highest inflow of assets at Pimco and it is the cross-border fund with the most inflows over the first half of 2017 out of all the funds on offer in the Citywire database.

The fund was also the second bestselling fund in 2016, with estimated net flows of $8.13 billion over the year. The higher yielding portion of the fund has driven returns with non-agency ABS and high yield corporate credit performing well.

Citywire AA-rated duo Daniel Ivascyn and Alfred Murata have managed the fund since 2012. Despite the large size of the fund, Murata told Citywire the fund still has room to grow.

Estimated net flows derived from Lipper data using monthly data points. Assets across all a fund’s share classes are included with performance stripped out. The universe covers all active mutual fund assets Citywire has fund managers assigned to in the global ex US peer group. Time period: Three years to 30/09/2017.

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Pimco GIS Global Invt Grade Credit

Net flows: $1.9 billion

The $19.4 billion Pimco GIS Global Invt Grade Credit fund has seen the second highest inflows out of the cross-border funds available at Pimco. The fund has outperformed its benchmark over the three-year period and performance could be one of the reasons why investors are attracted to the fund.

The fund has been managed by Citywire AA-rated Mark Kiesel since June 2003. Mohit Mittal joined him on the fund in August 2016.

In an investor update, Kiesel said that as bond yields had decreased, an overweight to US duration had helped the fund perform along with selective exposure to hard currency bonds in Brazil. In terms of holdings, financials is the biggest sector allocation at 19.7% of the fund. Pipelines and wirelines make up 4.5% and 4.1% of the fund, respectively.

Estimated net flows derived from Lipper data using monthly data points. Assets across all a fund’s share classes are included with performance stripped out. The universe covers all active mutual fund assets Citywire has fund managers assigned to in the global ex US peer group. Time period: Three years to 30/09/2017.

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Pimco GIS Total Return Bond

Net flows: -$419 million

The $59 billion Pimco GIS Total Return Bond strategy has been managed by Scott Mather and Mihir Worah since they took it on from Bill Gross in September 2014. The fund has seen the highest outflows out of all the cross-border funds available at Pimco.

Over the three-year time period, the fund, formerly the largest bond fund in the world, has managed to outperform its benchmark. The outflows refer to the Luxembourg-domiciled version of the fund, which are small compared to the overall size of the strategy.

In an investment update, Mather and Worah said the underweight to investment grade corporate credit had helped the fund’s performance. Short exposure to UK duration had detracted from the fund. In terms of holdings, US treasuries make up 52.5% of the fund, while agency-backed securities account for 33.7% of the fund.

Estimated net flows derived from Lipper data using monthly data points. Assets across all a fund’s share classes are included with performance stripped out. The universe covers all active mutual fund assets Citywire has fund managers assigned to in the global ex US peer group. Time period: Three years to 30/09/2017.

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Pimco GIS Global Real Return

Net flows: --$293 million

The $2.25 billion Pimco GIS Global Real Return fund has the second highest level of outflows of the funds available at Pimco. It is also the only one to underperform its benchmark over the three-year time frame, with this small underperformance perhaps being one of the reasons why investors have removed money from the fund.

Mihir Worah has managed the fund since October 2007, while Nic Johnson and Jeremie Barnet joined him in March 2015.

In their latest investor update, the managers said a long position on US breakeven inflation expectations, where inflation expectations had fallen, had harmed returns in the fund. US treasury notes make up nine of the top ten holdings in the fund, while an Italian government bond is the sixth largest position in the fund.

Estimated net flows derived from Lipper data using monthly data points. Assets across all a fund’s share classes are included with performance stripped out. The universe covers all active mutual fund assets Citywire has fund managers assigned to in the global ex US peer group. Time period: Three years to 30/09/2017.

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