If managers at American Funds feel someone breathing down their necks, it may be Pimco bond manager Bill Gross, who's poised to displace their Investment Company of America as the third-biggest US mutual fund.
Gross' Pimco Total Return Fund, this year's top-selling fund, passed the US$50 billion mark last week. That puts it in striking distance of Investment Company of America, one of the oldest US stock funds, which ended September with US$51.37 billion in assets.
Pimco Total Return has taken in US$6.69 billion of new cash this year through September as investors have fled a sinking stock market for bond funds. According to Boston-based Financial Research Corp, bond fund sales are set to hit US$97 billion this year, topping stock fund sales for the first time since 1991.
"Bill Gross had been quietly putting up outstanding numbers for years, only a lot people didn't notice when stock funds were returning four times that," said Russel Kinnel, director of research at Chicago-based fund tracker Morningstar Inc.
Gross, 57, a yoga enthusiast and former marathon runner, has produced a 10.6 percent gain for Pimco Total Return this year, according to Bloomberg, beating 84 percent of other bond funds in his category.
Investment Company of America, part of the American Funds group advised by Los Angeles-based Capital Research and Management Co, has taken in US$1.51 billion through September. Started in the 1930s, the fund has not posted a calendar-year loss since 1977, according to spokesman John Lawrence. The fund has been the third-biggest US mutual fund since December 1999.
The biggest US fund at the end of September was the US$77.80 billion Vanguard 500 Index Fund, down 14.5 percent this year through yesterday, followed by the US$71.65 billion Fidelity Magellan Fund, down 14.2 percent.
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