Investors pull $1 billion from Pimco Total Return Fund in May

The offices of PIMCO are shown in Newport Beach

By Jennifer Ablan

NEW YORK (Reuters) – Investors pulled approximately $1 billion from the Pimco Total Return Fund, one of the world’s largest bond funds, in May following cash withdrawals of the same amount the previous month, the Newport Beach, California-based firm said on Thursday.

Pimco said the Total Return Fund’s assets under management stood at $86.1 billion as of month-end May, down from $87 billion as of the end of April and $89.9 billion at the end of 2015, Pimco said in a statement. The Pimco Total Return Fund hit a peak of $292.9 billion in assets under management in April 2013.

May’s cash withdrawals from the Pimco Total Return Fund marks the portfolio’s 37th month of consecutive outflows, according to Morningstar data.

“Investors continue to wait for more evidence of a strong record of performance under current management of Pimco Total return before reinvesting,” said Todd Rosenbluth, director of exchange-traded and mutual fund research at S&P Global Market Intelligence.

“Assets have gravitated toward funds with both strong records and long tenured management both at Pimco and at other asset managers such as DoubleLine Capital,” he said.

Indeed, the Pimco Income Fund, overseen by Group CIO Dan Ivascyn, saw $1.8 billion in inflows in May and has received inflows of $21.5 billion collectively for all of 2015 and so far in 2016, according to the Pimco. The Pimco Income Fund now has assets under management of $59.8 billion, Pimco said.

For May, the Pimco Total Return Fund returned 0.27 percent after fees, outperforming the benchmark return of 0.03 percent. But through May, the Pimco Total Return Fund has posted year-to-date returns of 2.51 percent after fees, trailing the benchmark which has returned 3.45 percent year-to-date.

Like BlackRock Inc and Janus Capital Group Inc, Pimco adds dividend reinvestments into its inflow figures. Research organizations such as Morningstar and the Investment Company Institute, along with many fund managers, including Vanguard, Fidelity and DoubleLine, exclude reinvestments and treat only fund share purchases as inflows.

Pimco said in a statement that credit positioning among corporates, municipals and Emerging Markets hard currency debt added to performance of Pimco Total Return Fund. “Interest rate strategies, particularly non-U.S. positions in Mexico and the United Kingdom, hurt performance,” Pimco said.

(Reporting by Jennifer Ablan; Editing by James Dalgleish and Alan Crosby)