PIMCO Flagship Suffers Record Outflows Post-Gross

The Total Return Fund hemorrhaged $27.5 billion in withdrawals in October, an all-time record desertion. 

Investors pulled a record $27.5 billion from PIMCO’s flagship fund last month, with nearly half yanked in the five days following former CIO Bill Gross’ exit.

The bond giant stated October’s outflows trumped September’s figures of $23.5 billion and shrunk the Total Return Fund to $170.9 billion, a 42% drop from a peak of $293 billion April last year.

Gross announced his resignation from the firm he had co-founded over 40 years ago on September 26. He now manages a mutual fund at Janus Capital Group.

According to PIMCO, flows from the fund peaked on the day Gross left at an estimated $8 billion, and “slowed sharply throughout October.”

“The daily average flow for the last five days in October was approximately one-tenth of the daily average flow during the first five trading days after Bill Gross’ departure,” the firm said in a statement.

Despite disappointing figures, the firm said its flagship fund remains the largest actively managed bond fund in the world. It also made efforts to reassure clients of the fund’s liquidity profile and short-term cash management.

“As always, the fund is being managed consistent with the firm’s market outlook and alpha strategies while meeting diminishing redemptions,” it said. “In addition, the fund has maintained its desired portfolio structure with appropriate risk exposures as the fixed income markets remain liquid and well-functioning.”

PIMCO has also re-hired three senior staff in an effort to rebuild after the Gross breakup.

Michael Spence, a Nobel Prize winner who had left the firm in February, will act as consultant on “macroeconomic and global policy issues.” Jeremie Benet will take up positions of executive vice president and a portfolio manager on real return strategies after just four months away from PIMCO.

The firm announced on Monday it has appointed former senior portfolio manager Marc Seidner as CIO of non-traditional strategies and head of portfolio management in the New York office starting November 12.

“With Bill’s recent decision to resign, the perception has been that there has been a dramatic shift at PIMCO,” Doug Hodge, PIMCO’s CEO, said in a letter to clients last month. “However, the reality is that while PIMCO has evolved into a globally diversified investment company, our DNA is fundamentally unchanged.”

PIMCO Total Return Fund Outflows OctoberRelated Content: The High School Breakup, Why I left PIMCO, What Will the Gross Exit Cost?