Yesterday, moments after the WSJ reported [7]that in October, the first full month of investor-flow data since Bill Gross's stunning resignation on Sept. 26, "investors yanked an industry record $27.5 billion from Pacific Investment Management Co.’s flagship fund last month as the surprise exit of co-founder Bill Gross took its toll on the firm he co-founded, PIMCO was prepared for the damage control, issuing the following statement [8] just minutes after the WSJ article.
PIMCO Statement Regarding October Total Return Fund Net Flows
- Fund assets were $170.9 billion as of October 31, 2014
- Daily flows from Total Return Fund peaked on September 26th and outflows continued to slow during October (see below chart)
- Flows during last five days in October were approximately one-tenth of the average daily flow during the first five trading days after Bill Gross’s departure
- Year-to-date in-flows into Income strategies are $13.0 billion globally
?Newport Beach, CA (November 4, 2014): The PIMCO Total Return Fund (“the Fund”) assets were $170.9 billion as of October 31, 2014, and the Fund remains the largest actively managed bond fund in the world. Outflows from the Fund slowed considerably during the month of October, to approximately $27.5 billion for the month, with nearly half of these flows occurring in the first five trading days. The daily average flow for the last five days in October was approximately one-tenth of the daily average flow during the first five trading days after Bill Gross’s departure, as illustrated in the below chart*.
“Flows from the Total Return Fund peaked on September 26th, and slowed sharply throughout October. October performance of +0.80% after fees was in line with the Total Return Fund’s peer group,” said Daniel Tarman, a PIMCO spokesperson.
On a trailing three-month basis the Fund achieved a return of +0.97% after fees, and year-to-date the Fund has achieved a return of +4.16% after fees.
The liquidity profile of the Fund remains high and, as always, the Fund is being managed consistent with the firm's market outlook and alpha strategies while meeting diminishing redemptions. In addition, the Fund has maintained its desired portfolio structure with appropriate risk exposures as the fixed income markets remain liquid and well-functioning.
Importantly, several other PIMCO strategies and funds, such as the PIMCO Income Fund, continued to have positive inflows for the month. PIMCO’s $39 billion Income Fund achieved a return of +0.91% after fees in October. On a three-month trailing basis, the Income Fund achieved a return of +1.48% after fees, and year-to-date it has achieved a return of +8.24% after fees.
Year-to-date, PIMCO's Income strategies have experienced $13.0 billion of positive flows globally.
We applaud PIMCO's attempt to stem the bleeding, however by publicly confronting such a critical, for any asset manager, topic as fund outflows and even providing a handy daily chart of outflows, we fear it will only push the situation from bad to worse, as increasingly more investors ask themselves: "what are we missing."
Especially since the appropriate chart to focus on is not the one showing the outflows from the TRF since September, but the one below, showing the epic devastation that the flagship fund, the Total Return Fund, of the world's largest bond manager, has suffered since April 2013, when its AUM peaked at just inder $300 billion, and fast foward to October 2014, when it is now a whopping 42% lower and declining fast.
[9]
