PIMCO Total Return Fund falls in June, weakest month since 2008

Mon Jul 1, 2013 6:05pm EDT
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By Sam Forgione

NEW YORK (Reuters) - The PIMCO Total Return Fund, the world's largest bond fund, run by Bill Gross, in June sustained its weakest monthly performance since September 2008 amid a selloff in U.S. Treasuries and other bonds, data from Morningstar showed on Monday.

The fund, which has roughly $285.2 billion in assets, was down 2.64 percent last month, marking its weakest monthly performance since the collapse of Lehman Brothers in the fall of 2008. The fund was ahead of just 17 percent of other U.S. intermediate-term bond mutual funds that month.

The PIMCO Total Return ETF, meanwhile, was down 2.21 percent in June, marking its weakest monthly performance since inception in February 2012, the fund research firm Morningstar said.

The DoubleLine Total Return Bond Fund DBLTX.O, the flagship fund of the Los Angeles-based DoubleLine Capital LP, was down 1.74 percent last month - its weakest monthly performance since its inception in April 2010, Morningstar data showed.

That monthly performance bested 72 percent of peers, according to Morningstar.

The yield on the U.S. benchmark 10-year U.S. Treasury note rose about 36 basis points to 2.49 percent in June on fears that the Federal Reserve would scale back its $85 billion in monthly purchases of Treasuries and agency mortgage securities. As yields rise, prices fall.

Fed Chairman Ben Bernanke said on May 22 that the central bank could reduce its bond-buying later this year if the U.S. economy looked strong enough. Bernanke reiterated his stance at a press conference on June 19 and added that the central bank could halt its bond-buying altogether by mid-2014.

The PIMCO Total Return Fund had 37 percent of its portfolio invested in Treasury securities in May, its biggest position, according to PIMCO's website. The DoubleLine Total Return Bond Fund had over 4 percent of its assets in 10-year Treasury notes as of June 4, DoubleLine Chief Executive and Chief Investment Officer Jeffrey Gundlach said on an investor webcast.   Continued...

The headquarters of investment firm PIMCO is shown in this photo taken in Newport Beach, California January 26, 2012. REUTERS/Lori Shepler