Pacific Investment Management Co’s (PIMCO) biggest mutual fund had the worst year of client withdrawals in the history of fund management, as the firm lost both of its co-chief investment officers, Bill Gross and Mohamed El-Erian.
Investors pulled US$19.4 billion from PIMCO Total Return Fund last month, bringing redemptions last year to a record US$105 billion, according to data compiled by Bloomberg using information from Newport Beach, California-based PIMCO and Morningstar Inc.
Assets in the world’s biggest bond fund fell to US$143.4 billion as of Wednesday, according to a Friday statement from PIMCO, down by more than half from a peak of US$293 billion in April 2013.
“No doubt, it is the largest outflow for one year in [US] dollar terms” among money managers, said Russel Kinnel, director of mutual fund research at Chicago-based research firm Morningstar.
PIMCO is seeking to reassure investors and stem redemptions after Gross left on Sept. 26 last year, bringing back high-profile money managers and naming top performers to run its largest funds. The Total Return Fund, which was once the biggest US mutual fund, is now the fourth-largest as offerings from Vanguard Group Inc have overtaken it, according to data compiled by Bloomberg. The decline has erased more than five years of growth at the fund, bringing assets to 2008 levels.
“The pace of outflows during December continued to be significantly below the peak in September and early October 2014,” spokesman Daniel Tarman said in an e-mailed statement on Friday. “The fund’s experienced portfolio management team remains focused on pursuing investment opportunities designed to play out over the medium and long term, while retaining a focus on capital preservation and liquidity for shareholders.”
PIMCO can weather withdrawals from institutional and retail clients of as much as US$350 billion without hurting performance, according to Morningstar. PIMCO had US$1.87 trillion in assets under management as of Sept. 30 last year.
Last month’s redemptions from the fund followed a combined US$60.5 billion in September, October and November last year, including a record US$27.5 billion in October. In 2013, clients pulled US$41.1 billion from the fund, according to Morningstar estimates.
PIMCO Total Return, managed by chief investment officers Scott Mather, Mark Kiesel and Mihir Worah since Gross’ departure, trailed a majority of peers for the second straight year after missing a rally in longer-term bonds and betting that inflation would rise. The fund returned 4.7 percent last year, trailing 53 percent of comparable funds, after losing 1.9 percent in 2013, behind 65 percent of peers, according to data compiled by Bloomberg.
The fund had more than doubled from US$132 billion at the end of 2008, after navigating the financial crisis with returns that beat 82 percent of its rivals. Assets peaked in April 2013, before the US Federal Reserve hinted it would unwind stimulus measures, sparking redemptions and unsteady performance.
Gross, who cofounded PIMCO in 1971 and built it into one of the US’ largest money managers, resigned in September to run an unconstrained fund at Denver-based money manager Janus Capital Group Inc.
El-Erian, who shared the role of CIO with Gross and served as PIMCO’s chief executive officer, announced his resignation from the firm last January. El-Erian is now chief economic adviser at PIMCO’s parent Allianz SE and a contributor to Bloomberg View.
RECYCLE: Taiwan would aid manufacturers in refining rare earths from discarded appliances, which would fit the nation’s circular economy goals, minister Kung said Taiwan would work with the US and Japan on a proposed cooperation initiative in response to Beijing’s newly announced rare earth export curbs, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. China last week announced new restrictions requiring companies to obtain export licenses if their products contain more than 0.1 percent of Chinese-origin rare earths by value. US Secretary of the Treasury Scott Bessent on Wednesday responded by saying that Beijing was “unreliable” in its rare earths exports, adding that the US would “neither be commanded, nor controlled” by China, several media outlets reported. Japanese Minister of Finance Katsunobu Kato yesterday also
Taiwan’s rapidly aging population is fueling a sharp increase in homes occupied solely by elderly people, a trend that is reshaping the nation’s housing market and social fabric, real-estate brokers said yesterday. About 850,000 residences were occupied by elderly people in the first quarter, including 655,000 that housed only one resident, the Ministry of the Interior said. The figures have nearly doubled from a decade earlier, Great Home Realty Co (大家房屋) said, as people aged 65 and older now make up 20.8 percent of the population. “The so-called silver tsunami represents more than just a demographic shift — it could fundamentally redefine the
China Airlines Ltd (CAL, 中華航空) said it expects peak season effects in the fourth quarter to continue to boost demand for passenger flights and cargo services, after reporting its second-highest-ever September sales on Monday. The carrier said it posted NT$15.88 billion (US$517 million) in consolidated sales last month, trailing only September last year’s NT$16.01 billion. Last month, CAL generated NT$8.77 billion from its passenger flights and NT$5.37 billion from cargo services, it said. In the first nine months of this year, the carrier posted NT$154.93 billion in cumulative sales, up 2.62 percent from a year earlier, marking the second-highest level for the January-September
Businesses across the global semiconductor supply chain are bracing themselves for disruptions from an escalating trade war, after China imposed curbs on rare earth mineral exports and the US responded with additional tariffs and restrictions on software sales to the Asian nation. China’s restrictions, the most targeted move yet to limit supplies of rare earth materials, represent the first major attempt by Beijing to exercise long-arm jurisdiction over foreign companies to target the semiconductor industry, threatening to stall the chips powering the artificial intelligence (AI) boom. They prompted US President Donald Trump on Friday to announce that he would impose an additional
RSS