Gross’s Pimco Total Return Suffers 14th Month of Redemptions

Jul 02, 2014 2:35 pm ET

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July 2 (Bloomberg) -- Bill Gross’s Pimco Total Return Fund suffered the 14th straight month of net client redemptions as Gross struggled to turn around performance at the world’s biggest bond fund.

The fund, run by Pacific Investment Management Co. in Newport Beach, California, had estimated net redemptions of $4.5 billion in June, shrinking assets to $225.2 billion, Chicago- based research company Morningstar Inc. said today in an e- mailed statement. That’s down from a peak of $293 billion last year.

Gross, 70, has sought to stanch redemptions and reassure investors, telling clients Pimco funds will again rank at the top by year-end. Pimco is betting on a “new neutral” era characterized by global growth converging toward lower, more stable speeds and interest rates that remain below their pre- crisis equilibrium.

“Patient investors are rewarded over the long-term by sticking with core bond allocations in a diversified portfolio,” Mark Porterfield, a spokesman for Pimco, said in an e-mailed statement. “The Pimco Total Return fund has outperformed its benchmark and a majority of its peers over the last 1, 3, 5, 10 and 15 years.”

The formerly top-ranked fund has seen its five-year ranking slip to the 58th percentile, according to data compiled by Bloomberg. Total Return climbed 0.2 percent in the past month, beating 84 percent of peers. Investors pulled a record $41.1 billion from the fund last year, according to Morningstar.

The exchange-traded fund version of Total Return received net investor money of $33 million in June, bringing assets to $3.4 billion, the data show.

Morningstar estimates deposits or withdrawals for mutual funds by computing the change in assets on a monthly basis that isn’t accounted for by performance. The fund’s actual withdrawals or deposits may differ from Morningstar’s estimates because of the timing of purchases and redemptions or dividend distributions.