Pimco's outflow headaches only just beginning
Reuters ...Outflows from Pimco may be far from over as many investors have yet to decide whether to stick with the Newport Beach, California-based asset manager.
Pimco hasn't said how much money has been withdrawn since fund manager Bill Gross quit on Sept. 26 to join Janus Capital. Pimco said its Total Return fund, which Gross had personally managed for 27 years, saw $23.5 billion in withdrawals in September. Morningstar, which analyzes mutual funds and other investments, estimated net outflow from Total Return at $17.9 billion in September, part of $25.5 billion of net outflows across all of Pimco's U.S. open-ended funds in September.
The withdrawals come as broker-dealers are holding fewer bonds, reducing the options for fund companies seeking to sell holdings to raise the money to meet redemption demands. That may cause the performance of some funds - including Pimco's - to lag, as spreads among less-liquid instruments creep higher and investors find themselves forced to choose between moving quickly or getting a fair price for debt they're selling....
Not all institutional clients are on the fence, of course. The Employees' Retirement System of the State of Hawaii, for example, has decided to stick with the California asset manager.
"After recent meetings with Pimco staff, we currently believe that the new team is fully capable of meeting our expectations," the system's executive director, Wesley Machida, wrote to Reuters.
Pimco declined to comment.
Total Return Fund has gained 3.3 percent this year through the end of September, trailing the performance of 79 percent of its peers, according to Morningstar. The fund is up about 6.6 percent since Jan. 1, 2009, better than 58 percent of its peers, according to Morningstar.
To be sure, investors who follow Gross out of Pimco could find themselves losing out in the long run. Dan Ivascyn, Pimco's new CIO, was named 2013 Fixed-Income Fund Manager of the Year by Morningstar for his work on the Pimco Income Fund....
read ... Sticking With PIMCO
UPDATE
PIOnline, Oct 8, 2014: Hawaii Employees’ Retirement System, Honolulu, will likely put Pacific Investment Management Co. on watch at its Oct. 20 board meeting because of the departure of William H. Gross, PIMCO’s co-founder and chief investment officer, said Vijoy Chattergy, chief investment officer.
Mr. Chattergy said officials at the pension fund have confidence in PIMCO’s new team. However, it is “normal procedure” for a manager to be formally placed on watch for major personnel changes, he added.
PIMCO manages between $550 million and $560 million in core-plus fixed income for the $14.1 billion pension fund.
Background: