(August 5, 2013) – The world’s largest bond fund, PIMCO’s Total Return, shrunk by (August 5, 2013) – The world’s largest bond fund, PIMCO’s Total Return, shrunk by $17.1 billion in net flows during June and July, according to Morningstar data.
The fund had $261.7 billion in assets as of August 5.
PIMCO founder and Co-Chief Investment Officer Bill Gross has been the lead manager for Total Return since its launch in May, 1987.
Gross has spoken for restrained reactions to rising interest rates, arguing that the Federal Reserve was unlikely to turn the monetary easing taps off until 2016.
"Focus on the policy rate…Focus on the policy rate…Focus on the policy rate,” he urged investors via Twitter in mid-July, advising the purchase of US Treasury bonds with five- to seven-year duration.
The Total Return fund’s capital flows have been matched by the direction of its performance: downward.
For the year-to-date, Morningstar data showed the fund down 2.80%—50 basis points below iShares’ Barclays aggregated bond fund, and 90 bps under the average performance for funds in its category.
May, June, and July mark the first time the Total Return fund has suffered three months of consecutive net withdraws in its 26-year history.
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