Gross's bond fund bleeds $1.4 billion in December: Morningstar

Tue Jan 3, 2012 6:37pm EST
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By Matthew Goldstein and Jennifer Ablan

(Reuters) - The PIMCO Total Return Fund, the world's largest bond fund, had $1.4 billion in outflows in December, according to fund analytics firm Morningstar.

The fund, operated by Bill Gross, co-chief investment officer of Pacific Investment Management Co, suffered total redemptions of $5 billion in 2011, a year in which the fund underperformed benchmarks after betting heavily against U.S. Treasuries, which rallied on the year.

The fund, which has about $244 billion in assets under management, has had investor redemptions on and off for more than a year. Morningstar estimates total redemptions have exceeded $13 billion since November 2010.

Still, December was kinder to Gross than the previous year. In December 2010, Morningstar estimates investors withdrew $6.7 billion from the fund, PIMCO's flagship.

A spokesman for PIMCO, which is based in Newport Beach, California, and oversees more than $1.35 trillion in assets, was not immediately available to comment

Last year was a humbling one for Gross. His bad call on Treasuries led him to issue an unusual "mea culpa" letter to his investors.

U.S. Treasuries were the best-performing bond class in 2011 by a wide margin. The benchmark 10-year Treasuries returned nearly 17 percent in 2011, the largest gain for the U.S. bonds since 2008.

Meanwhile, other intermediate-term bond funds reported taking in new money in 2011, according to Morningstar. The JPMorgan Core Bond Fund took in $2.6 billion in new money and now has $23 billion in assets. The Metropolitan West Total Return Fund took in $5.3 billion in new money and now manages over $17 billion.   Continued...