Things are rapidly shifting from bad to worse for PIMCO. In a triple whammy this morning, Bloomberg reports the Total Return Fund ETF (managed previously by Bill Gross) has suffered $446 million outflows (or over 12.5% of assets) so far; Morningstar downgrades the fund from 'gold' to 'bronze' citing "uncertainty regarding outflows and the reshuffling of management responsibilities"; and perhaps most concerning - given our previous warnings over bond market illiquidity [10] - The FT reports [11], US regulators are monitoring trading and fund flows surrounding PIMCO's Total Return Bond fund warning investors they should contemplate the unintended consequences of pulling their money and the possibility of systemic risk disruptions, fearful of "runs."
First outflows are accelerating...
- *PIMCO ETF GROSS MANAGED SEES RECORD $446 MILLION OUTFLOW
- *PIMCO TOTAL RETURN ETF OUTFLOW REPRESENTS 12.5% OF SHARES
And Then...
Morningstar, the influential mutual fund research group, stripped the Total Return fund of its “gold” analyst rating late on Monday, downgrading it to “bronze” because of the “uncertainty regarding outflows and the reshuffling of management responsibilities”.
And on top of that, as The FT reports, [11]
US regulators are monitoring trading and fund flows surrounding Pimco’s $223bn Total Return Bond fund and other products, in what could prove a test case in the debate over whether asset management groups contribute to systemic risk.
Officials at the Securities and Exchange Commission, the Federal Reserve and the US Treasury, among other bodies, have been talking to industry executives and other investors and warning they should contemplate unintended consequences of pulling their money from Pimco.
...
It also warned that large funds might be subject to “runs” if investors believe there is an advantage to pulling their money first, and it suggested regulators gather more data to test the concerns.
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