By Sam Forgione
NEW YORK Dec 2 Bill Gross's Pimco Total Return
Fund, the world's largest bond fund, delivered flat performance
in November, averting losses even as fears surrounding the
Federal Reserve's next policy move hurt bond prices, preliminary
data from Morningstar showed on Monday.
The performance of the fund, which has $248 billion in
assets and is the flagship of bond giant Pimco, marked its
weakest turnout in three months but beat the performance of 85
percent of its peers, the data showed.
Gross has averted losses in his fund by shortening the
duration of the fund's assets, said Todd Rosenbluth, director of
mutual fund research at S&P Capital IQ. The fund's effective
duration was 4.35 years as of Oct. 31, according to the Pimco
The fund's performance is important because Pimco manages
roughly $1.97 trillion and is one of the world's largest bond
managers. The Newport Beach, California-based Pacific Investment
Management Co is a unit of European financial services company
The Pimco Total Return Exchange-Traded Fund, an
actively-managed ETF which is designed to mimic the strategy of
the flagship mutual fund, fell 0.35 percent last month, marking
its first negative performance in three months but still beating
50 percent of peers.
The ETF, which was launched in February 2012, has roughly
$3.7 billion in assets, according to Morningstar. The ETF is
down 0.33 percent this year, beating 88 percent of peers,
according to Morningstar data.
Gross's flagship fund averted a negative performance in
November despite uncertainty surrounding the Fed's plans for
unwinding its $85 billion in monthly bond-buying, which hit bond
U.S. Treasury yields shot higher on Nov. 20 after minutes
from a Federal Reserve policy meeting in October suggested the
U.S. central bank could begin to scale back quantitative easing
in the next few months. The Fed's next meeting is in December.
The yield on the benchmark 10-year U.S. Treasury note rose
20 basis points to 2.74 percent over the month. The Barclays
U.S. Treasury index fell 0.33 percent over the month, marking
its first negative return in three months.
As of Oct. 30, Gross's fund had 37 percent of its assets
invested in Treasuries and other U.S.-government related
securities, according to the Pimco website.
For the year, the mutual fund is down 0.97 percent, beating
54 percent of peers, according to Morningstar data. The fund
endured a rocky summer period starting in May, when interest
rates spiked higher on fears that the Fed could begin scaling
back its bond purchases this year.
Losses in May, June, and August, combined with outflows of
$33.2 billion this year through October stripped the fund of its
status as the world's largest mutual fund, Reuters reported last
month. That title now belongs to the $251.1 billion Vanguard
Total Stock Market Index.
Jeffrey Gundlach's DoubleLine Total Return Bond Fund
, a competitor to the Pimco fund, fell 0.22 percent in
November, beating 55 percent of peers, the preliminary data
showed. That marked the fund's first negative monthly return in
three months after a gain of 0.64 percent in October.
The fund is up 0.72 percent this year, beating 91 percent of
peers, according to Morningstar. The Barclays U.S. Aggregate
bond index, meanwhile, is down 1.47 percent this year.
The fund had $811.2 million in outflows in November. The
outflows marked the sixth straight month of withdrawals from the
fund, which is the flagship of the Los-Angeles based DoubleLine
The outflows reduced assets in the fund to about $33.3
billion, according to Morningstar data. DoubleLine, where
Gundlach is chief executive and chief investment officer, had
$53 billion in assets as of Sept. 30.
The outflows from the fund also accounted for most of the
$823.1 million in total withdrawals from the firm's U.S. mutual
funds in November, Morningstar data showed. The Total Return
Bond Fund now has roughly $33.3 billion in assets.
"DoubleLine's intermediate-term bond funds continue to
experience net outflows, as is the case among intermediate-term
bond funds throughout the industry," said Loren Fleckenstein,
analyst at DoubleLine.
He noted that the firm's short-duration bond, floating-rate
bond, and stock funds have attracted inflows.
Investors have continued to pull cash out of bond funds
since June on fears of a spike higher in interest rates once the
Fed begins scaling back the $85 billion in monthly bond
purchases for its economic stimulus program known as
Investors pulled $21.8 billion from bond mutual funds and
exchange-traded funds in November, marking the biggest outflow
since $36.8 billion in August and the fifth-highest monthly
outflow on record, according to data from TrimTabs Investment