Pimco Total Return Fund posts record $23.5 billion net outflow in September

Wed Oct 1, 2014 6:56pm EDT
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By Jennifer Ablan and Luciana Lopez

(Reuters) - Pacific Investment Management Co suffered a record $23.5 billion of withdrawals from its flagship Pimco Total Return Fund in September, with its largest daily outflow occurring on the day of Bill Gross's surprise resignation from the firm.

The Newport Beach, Calif.-based fund manager said the Pimco Total Return Fund, run by Gross for 27 years who made it into the world's largest bond fund, is "well positioned" to meet potential redemptions.

The Pimco Total Return Fund has now experienced 17 straight months of outflows, totaling $92.3 billion. Assets under management have fallen below $200 billion, down from a peak of $292.9 billion in April 2013.

"I'd say that this spike in outflows might not be over. Earlier we thought that $8 billion or $9 billion in a month was pretty bad, and here we're getting $8 (billion) and $9 billion a day," said Jeff Tjornehoj, head of Americas research at Lipper, a Thomson Reuters company.

"I think there's probably a couple of phases to it. First, it's the shock, people who had been thinking of withdrawing assets to Total Return reacted immediately. And then the next phase is those who are wondering if they got left behind."

Gross, the bond market's most renowned investor and sometimes called the "Bond King," quit Pimco for distant rival Janus Capital Group Inc on Friday, a day before he was expected to be fired from the firm he helped found more than 40 years ago.

Added Jeffrey Gundlach, the founder of DoubleLine Capital, an investment firm that has been a major rival of Pimco: "I don't know this for sure, but if you have any common sense, that money of record withdrawal came out the last three days."

Gundlach's DoubleLine reported an eighth consecutive month of inflows in September, with net inflows of $1.65 billion, more than double the amount of the previous month.   Continued...

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