Pimco, TCW, Loomis post record bond inflows

*Pimco's flagship Total Return fund top seller in '09

*Loomis Sayles hits all-time high in assets of $136.4 bln

*Fixed-income no longer 'stepchild of assets': MetWest

By Jennifer Ablan

NEW YORK, Sept 18 (Reuters) - Pacific Investment Management, Trust Company of the West and Loomis Sayles are among firms whose bond funds are enjoying record inflows this year even as stock markets continue to rise.

Bill Gross, co-chief investment officer at Pimco, has seen his Total Return fund (PTTAX.O) become the top-selling mutual fund throughout 2009, with August its best month yet with inflows of almost $5.5 billion, bringing net assets to $177.5 billion for the fund.

Jeffrey Gundlach, chief investment officer at Trust Company of the West, also has enjoyed record inflows as his flagship TCW Total Return fund (TGLMX.O) has grown to $9.3 billion from $2.4 billion in January.

Mom and Pop investors are increasing their exposure in fixed-income funds despite the 58 percent rise in the benchmark Standard & Poor's 500 index .SPX since March, underscoring the sentiment that individuals' memories of the past year's financial meltdown are still fresh.

"Fixed income was the stepchild of assets during the boom years," said Tad Rivelle, chief investment officer at Metropolitan West Asset Management. "Equities were interesting and hedge funds more exciting. There were all sorts of areas that individuals and institutions felt were potentially more promising and fixed income was not one of them."

But there has been a reappraisal of asset allocation over the course of the last 18 months, said Rivelle.

MetWest's Total Return Bond Fund has a record high $6.580 billion in assets, up from $5.366 billion at the end of last year. Inflows year to date are $549 million.

Dan Fuss, co-manager of the Loomis Sayles bond fund (LSBDX.O), which has $18 billion in assets, said in an interview that assets under management at Loomis hit an all-time high last week at $136.4 billion. At the start of the year, Loomis' net assets were $100 billion.

Fuss said the credit market's rally has helped the performance of many bond funds including his, but emphasized there is a fundamental shift in investors' asset allocation portfolios. "There's a realization that perhaps individual investors have been underinvested in these markets, so they are moving money here," he said.

The timing couldn't be any better.

U.S. credit markets have rebounded strongly this year, following last year's catastrophe led by the credit quality deterioration of many corporations, highlighted by the collapse of American International Group and Lehman Brothers.

"Last year was a fantastic buying opportunity because there were sellers and no buyers," resulting in dramatically lower prices on corporate and junk bonds, Fuss said.

Fortunately, Fuss was a buyer of both.

So far this year, junk is returning 45 percent while corporate debt securities are posting returns of more than 15 percent. The Loomis Sayles fund is up 30 percent year to date. (Reporting by Jennifer Ablan; Editing by Andrea Ricci)