Investors pull $1.1 billion from Pimco Total Return Fund in January

The offices of Pacific Investment Management Co (PIMCO) (R) are shown in Newport Beach, California August 4, 2015. REUTERS/Mike Blake

NEW YORK (Reuters) - The Pimco Total Return Fund, which lost its crown as the largest bond fund in the world last year, started 2016 with yet another round of outflows, $1.1 billion in January, illustrating the difficulty Pimco’s flagship fund is having in attracting new money.

The latest cash withdrawal follows December’s positive inflow of $1.3 billion for the fund, but that was only because of clients’ reinvestments of capital gains.

“The Pimco Total Return Fund is struggling to gather new assets despite the strong record in 2015 and thus far in 2016,” said Todd Rosenbluth, head of exchange-traded fund and mutual fund research at S&P Capital IQ. “The fund remains in a penalty box since the departure of Bill Gross despite a strong recent yet short-term record.”

Rosenbluth said the Pimco Total Return Fund was up 0.72 percent while its Lipper Core Plus Bond peers declined 0.81 percent and the broader taxable bond universe fell 1.87 percent in 2015.

In January, the fund was up 1.02 percent versus 0.40 percent for peers and negative 0.03 percent for the broader universe, he added.

It was a different story for the Pimco Income fund, which is overseen by PIMCO Group Chief Investment Officer Dan Ivascyn. Pimco Income attracted inflows of $1.2 billion in January for a total of $15.6 billion since the beginning of 2015, according to Pacific Investment Management Co’s website on Tuesday.

Mike Reid, Pimco spokesman, said in a statement: “Investors have continued to be attracted to our top-performing actively managed strategies amid recent volatility in the markets.”

Gross, the legendary bond manager long known as the 'Bond King,' exited Pimco suddenly in September 2014 for smaller rival Janus Capital Group Inc JNS.N. The Pimco Total Return Fund, which Gross had managed since 1987, hit a peak of $292.9 billion in assets under management in April 2013.

Reporting by Jennifer Ablan; Editing by Chris Reese, James Dalgleish and Meredith Mazzilli