(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, Morningstar said.
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 year.
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)