(Corrects million to billion in first sentence)
By Sam Forgione
NEW YORK Aug 6 Investors pulled $7.4 billion
from the U.S. mutual funds of bond giant Pimco in July, roughly
half of the record outflows recorded in June, data from
Morningstar showed on Tuesday.
The outflows for July were the second biggest on
Morningstar's records, which date to 1993, and follow outflows
of $14.5 billion in June from Pimco's U.S. mutual funds.
Fears of rising interest rates on expectations that the
Federal Reserve will begin to reduce its bond-purchase program
in coming months drove investors to pull cash out of bond funds
in June and July. U.S. bond funds had outflows of $21.1 billion
in July after record outflows of $69.1 billion in June,
according to TrimTabs data.
For Pimco, outflows of $7.5 billion from its flagship bond
fund, the Pimco Total Return Fund, drove overall outflows across
its U.S. mutual funds in July. Pimco Total Return, which is run
by Pimco founder and co-chief investment officer Bill Gross and
ranks as the world's largest mutual fund, had record withdrawals
of $9.6 billion in June.
Pimco Total Return fund has roughly $262 billion in assets,
according to Chicago-based Morningstar.
The overall outflows from Pimco includes all of the firm's
open-end mutual funds based in the United States, Morningstar
said. While Pimco's bond funds suffered total outflows of $7.3
billion, its stock funds had inflows of $138 million.
Newport Beach, California-based Pacific Investment
Management Co., a unit of European financial services company
Allianz SE, had $1.97 trillion in assets as of June
30, according to the firm's website.
After the Pimco Total Return Fund, the Pimco Real Return
Fund suffered the second-biggest outflows among bond funds, at
$980 million. The Pimco Investment Grade Corporate Bond Fund
had the third-biggest outflows, at $940 million,
The Pimco Total Return Exchange-Traded Fund had
outflows of $137 million in July. The actively managed ETF,
which was up 0.16 percent in July, is down 1.87 percent for the
Other bond funds at Pimco had net inflows in July. The Pimco
Unconstrained Bond Fund led with cash gains of $1.5
billion in July, followed by inflows of $600 million into the
Pimco Credit Absolute Return Fund and $547 million into the
Pimco Long-Term Credit Fund.
Pimco Total Return Fund was up 0.49 percent in July,
reversing a fall of 2.64 percent in June, which was its weakest
performance since September 2008. The fund is down 2.52 percent
this year, ahead of 38 percent of peers, Morningstar added.
Pimco was not alone in posting outflows for July.
Los Angeles-based DoubleLine Capital LP, a competitor to
Pimco, had outflows of $631 million from its U.S. mutual funds
for the month, marking a second month of outflows. DoubleLine's
U.S. funds had their first-ever monthly outflows in June, of
roughly $1.45 billion.
The outflows were led by the firm's flagship, the DoubleLine
Total Return Bond Fund, at $580 million.
DoubleLine Total Return Bond, with assets of roughly $38
billion, fell 0.22 percent in July, after declining 1.74
percent in June. The fund is down just 0.47 percent this year,
above 95 percent of peers, Morningstar said.
DoubleLine, which is run by chief executive and chief
investment officer Jeffrey Gundlach, had over $55 billion in
assets as of March 31, according to the firm's website.
(Reporting by Sam Forgione; Editing by Leslie Adler)