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PIMCO's flagship fund hit by record $27.5bn outflow in October

PIMCO's flagship fund hit by record $27.5bn outflow in October

Investors withdrew a record $27.5 billion (€22 bn) from PIMCO’s flagship Total Return Bond fund in October.

The redemptions were triggered by the shock defection of PIMCO founder Bill Gross (pictured) to Janus Capital at the end of September and marked the 18th consecutive month of outflows from the fund.

Nearly half of these flows occurred in the first five trading days with total assets under management in the fund now standing at $170.9 billion (€136 bn) at the end of October, down from a peak of $293 billion (€234.5 bn) in April 2013. The redemptions surpassed the previous record set in September, when investors withdrew $23.5 billion from the Total Return fund.

In the statement PIMCO indicated the strategy was able to cope with the redemptions. ‘All redemptions from the fund are being managed without issue and with an NAV of 24.77 the fund is close to surpassing its all-time high of 25.09.’   

‘The fund continues to maintain its desired portfolio structure with appropriate risk exposures as the fixed income markets remain liquid and functioning normally.’

In another statement issued overnight in relation to the Dublin-domiciled Ucits version of the fund, PIMCO highlighted outflows had also slowed throughout October.

The US firm said outflows in the Ucits-compliant GIS Total Return fund in last five trading days of October had declined by around 90% from the first five trading days following Gross' exit. This left outflows in the Ucits version of the fund at around $2.1 billion (€1.7 bn) for the month.

This fund's assets stood at $11.4 billion (€9.1 bn) at the 31 October.

The firm also highlighted strong demand for its other Ucits strategies, including the PIMCO GIS Income and GIS Capital Securities funds, which both received positive inflows for around $3 billion (€2.4 bn) in October.

‘Flows across the GIS (Global Investors Series) range in aggregate have normalised and are quickly returning to historic levels experienced prior to Bill Gross’s departure with several consecutive days of positive net inflows at the end of October,’ Pimco said.  

PIMCO has been on the front foot ever since Gross’ exit in bid to protect assets. His replacement as chief investment officer, Daniel Ivascyn, emphasised the firm’s 'deep bench of talent' at the end of September.

‘We have assembled a team of world-class investors over the course of many years, and established a time-tested top-down, bottom-up investment process that will guide our investment philosophy and continue to serve our clients well into the future,’ Ivascyn said.  

At the same time PIMCO chief executive Douglas Hodge said: ‘As part of our responsibilities to our clients, employees and parent, PIMCO has been developing a succession plan for some time to ensure that the firm is well prepared to manage a seamless leadership transition in its portfolio management team.’

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