September 6, 2013 / 7:12 PM / 6 years ago

Investors yank $11 billion from Pimco U.S. mutual funds in August: Morningstar

NEW YORK (Reuters) - Pimco, manager of the world’s largest bond fund, had outflows of $11 billion from its U.S. mutual funds in August, marking the second-biggest monthly withdrawals on record as a selloff in the bond market continued, Morningstar data showed on Friday.

The headquarters of investment firm PIMCO is shown in this photo taken in Newport Beach, California January 26, 2012. REUTERS/Lori Shepler

The outflows from the Newport Beach, California-based firm’s U.S. mutual funds in August were the second-highest since Morningstar began tracking them in 1993 and marked an increase from $7.4 billion pulled out in July.

Investors have withdrawn roughly $33 billion from Pimco’s U.S. mutual funds over the past three months, according to Morningstar data. The firm had its biggest-ever monthly outflows of $14.5 billion in June.

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.

Investors continued to dump bonds in August on expectations that a pullback in the Fed’s monthly $85 billion bond purchases may cause interest rates to spike higher. Interest rates move inversely to prices.

The yield on the benchmark 10-year U.S. Treasury note hit a two-year high of just over 2.93 percent on August 22.

Bond mutual funds and exchange-traded funds also had outflows of $42.8 billion in August, according to data provider TrimTabs.

That marked the second-largest monthly outflow from the funds on record after investors pulled $68.6 billion from the funds in June. TrimTabs began tracking the funds in 1993.

Outflows of $7.72 billion from the flagship Pimco Total Return Fund accounted for the bulk of withdrawals from Pimco in August, the data from Morningstar showed.

The fund, run by Bill Gross, ranks as the world’s largest bond fund with $251 billion in assets. The fund has seen its assets shrink by 14 percent over the past four months, or roughly $41 billion, as a result of withdrawals and price losses.

Investors have pulled roughly $26 billion from the fund over the past four months, while portfolio losses amounted to roughly $15 billion, according to the Chicago-based Morningstar.

The fund, which had 39 percent of its holdings in U.S. government-related securities at the end of July, has been hit by the decline in Treasury prices.

The fund fell 1.07 percent in August, putting it above just 8 percent of peers, according to Morningstar. The fund is down 4.66 percent for the year, according to the Pimco website.

DoubleLine Capital LP, a competitor of Pimco run by chief executive Jeffrey Gundlach, had outflows of $1.15 billion in August, up from withdrawals of $631 million in July, according to Morningstar.

The bulk of the outflows came from the DoubleLine Total Return Bond Fund, the firm’s flagship fund run by Gundlach, who is also the firm’s chief investment officer. Investors pulled $1.13 billion from the fund in August.

The fund fell 0.31 percent in August, putting it above 93 percent of peers, according to Morningstar.

The Los Angeles-based DoubleLine Capital LP oversees roughly $57 billion in assets.

Reporting by Sam Forgione; Editing by Jennifer Ablan and Diane Craft

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