Pimco Total Return Fund of Bill Gross gained a world record of US$9.9 billion withdrawals last month. Pimco was the globe's biggest mutual fund. The net redemptions happened when investors escaped bonds. This was due to Federal Reserve's scaling back of its own purchases.
Today, Morningstar Inc., a Chicago-headquartered research business, said it received an initial estimate about the withdrawals. Pacific Investment Management Co., a California-based firm that manages the fund provided the data. An e-mailed statement from Morningstar said that by the end of June, the redemptions left the fund with only US$268 billion in assets.
"Money really came out of core bond funds in June," said an analyst from Morningstar, Michael Rawson. "The market reacted to the Fed."
As of March 31, greater than 90% of Pimco's US$2.04 trillion assets were invested in bonds. The withdrawals made Pimco even more vulnerable. Pimco, together with fund managers, were heavily affected by the volatility of bonds. They were supposed to use the bonds to earn in fixed-income markets.
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