Pimco fund posts 19th month of outflows, but CIO touts stabilization

Tue Dec 2, 2014 4:35pm EST
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By Jennifer Ablan

NEW YORK (Reuters) - The Pimco Total Return Fund posted its 19th straight month of outflows in November, totaling $9.5 billion, but withdrawals are down dramatically since former Chief Investment Officer Bill Gross' exit.

Dan Ivascyn, who replaced Gross, said on Tuesday that net cash outflows from various funds had tapered off and performance had improved following a drop after Gross left on Sept. 26.

"We've been very stable in implementing our investment process from the first day of Bill's departure," Ivascyn said. "From that perspective, we’ve been in very good shape."

In November, the Pimco Total Return Fund bled $9.5 billion, but that compares with a record $27.5 billion of withdrawals in October and $23.5 billion reported for September, according to a statement by Pacific Investment Management Co.

In November, the $162.8 billion Pimco Total Return Fund, under a new team led by long-time Pimco portfolio manager Scott Mather, posted returns of 1.00 percent, beating 99 percent of its intermediate-term category group, according to Morningstar data.

While that boosts Pimco Total Return's overall year-to-date return to 5.20 percent, the flagship Pimco fund is still trailing 62 percent of its peer category for the year.

Mather acknowledged that a turnaround of Pimco Total Return would not come overnight. "It takes many quarters, sometimes, for some themes to pay off," he said.

Mather said the Total Return Fund had taken on a defensive approach in many different sectors, with an underweight position in corporate credit and mortgages. That has protected it from recent spread-widening over the last month, which contributed to relative outperformance, he said.   Continued...

An undated handout photo of Pimco's headquarters in Newport Beach, California. REUTERS/Pimco/Handout