(Adds Pimco declines comment and Pimco Total Return Fund's
By Jennifer Ablan
NEW YORK, July 31 The Pimco Total Return Fund,
the world's largest bond fund, run by Bill Gross, is ending the
month on a rough note, lagging 89 percent of its peers so far in
According to preliminary Morningstar data on Thursday,
Pimco Total Return is posting a negative 0.44 percent return,
while its peer-fund category has a negative 0.23 percent return
for the month as of July 30.
Gross' fund performance is widely followed as an industry
benchmark, though this year has been one of Gross' roughest
patches. Gross' successor, Mohamed El-Erian, resigned earlier
this year, and the Pimco Total Return fund has had over $64
billion of net outflows since May 2013.
"The Pimco Total Return Fund (PTTRX) has a lot of duration
exposure to the 1-5 year point of the yield curve, the exact
spot where yields rose during July," said David Schawel, vice
president and portfolio manager of Square 1 Financial.
"Meanwhile, they show to have just 11 percent of maturities
over 10 years, areas which rallied the past month."
Gross has maintained his position on favoring
shorter-maturing debt. He has repeatedly said fixed-income
securities maturing in five to 30 years were "at risk" given
reduced bond buying from the Federal Reserve.
Gross said the bonds the Fed "has been buying will have to
be sold at higher yields to entice the private sector back in."
But the long end of the Treasury yield curve has been
In July, the Barclays Capital U.S. 20 Year Plus Treasury
Bond Index posted returns of 2.25 percent. For the year, the
Barclays 20 Year Plus is up 15.73 percent.
For the year, the Pimco Total Return fund is up 3.25
percent, lagging 76 percent of its peer category, Morningstar
The Pimco Total Return Exchange-Traded Fund, an
actively managed ETF designed to mimic the strategy of the
flagship mutual fund, is posting a return of 0.04 percent in
July so far and 4.32 percent so far this year. The Pimco ETF
ranks at the top of its category, though its assets under
management, at about $3.46 billion, are considerably smaller
than the plain-vanilla fund.
The Pimco Total Return Fund had $225 billion in assets at
the end of last month, down from a peak of $292.9 billion in
April 2013. A Pimco spokesman declined to comment on the
(Reporting by Jennifer Ablan; Editing by James Dalgleish , Phil
Berlowitz and Dan Grebler)