Pimco's top investment officer said on Tuesday that "late decision makers" are largely behind a rush of withdrawals from its flagship bond fund some five months after the departure of longtime manager Bill Gross, but the outflows should taper off before long.
Dan Ivascyn, group chief investment officer for Pimco, said in an interview that many institutional investors take months to decide on and execute a reallocation from one fund or firm to another. As a result, it is not surprising that outflows persist so long after Gross' departure in late September.
Ivasycn's comments came as the firm reported another $8.6 billion of outflows in February from the Pimco Total Return Fund, bringing withdrawals to $76.6 billion since Gross moved from Pimco to Janus Capital Group Inc.
"Not surprised by the outflows," Ivascyn said by phone from the firm's Newport Beach, California, headquarters. "A lot of the decisions are now delayed decisions from several months ago. We expected some of these to ripple through the new year."
The $124.7 billion fund is now fraction of its size nearly two years ago, when under Gross it ranked as the world's largest mutual fund, with $292.9 billion in assets in April 2013.
What started as a trickle of redemptions the following month accelerated as Gross' performance subsequently slipped and he became embroiled in a leadership squabble when his long-time associate Mohamed El-Erian left the firm a year ago.
It is not just the total return fund that has suffered: Investors pulled $150 billion from Pimco's U.S. open-end mutual funds last year, according to Morningstar data.
Ivascyn said that, despite the very public leadership changes at Pimco "our organization has remained quite stable."
Once the withdrawals run their course, Pimco will be in "really good shape," he added.
The outflows have not hurt the Total Return Fund's performance, he said.
In the five months since Gross left, the fund returned 3.25 percent, or 0.30 percentage point above the benchmark Barclays U.S. Aggregate Bond Index, and 0.90 percentage point above the Morningstar Intermediate Term Bond Average peer group category.
Now overseen by Scott Mather, Mark Kiesel and Mihir Worah, the fund returned 1.90 percent year-to-date through Feb. 28, beating its benchmark by 0.76 percent point.
Pacific Investment Management Co, a unit of Allianz SE, had $1.68 trillion in assets under management as of Dec. 31.
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