(Adds returns for Pimco Total Return fund against benchmark, background)
By Jennifer Ablan
NEW YORK, Nov 3 (Reuters) - Pacific Investment Management Co’s flagship fund posted a $1.6 billion cash withdrawal in October, its smallest monthly outflow this year, the Newport Beach, Calif-firm said on its website on Tuesday.
The slowdown in outflows from the Pimco Total Return Fund, with assets under management of $93.7 billion, comes as Pimco has posted a sharp improvement in the fund’s performance.
The Total Return fund beat 91 percent of similar bond funds in October, returning 0.76 percent compared with 0.02 percent for the Barclays U.S. Aggregate Bond index. The fund has delivered a return of 1.02 percent year-to-date through November 2, beating 74 percent of similar bond funds, Morningstar said.
“We took advantage of market pricing that reflected extreme worry about spillovers from China and global deflation in September,” said Scott Mather, portfolio manager for Total Return. “As markets calmed and reassessed the probabilities with new data in October, our positions in corporate credit, mortgages, and Treasuries benefited.”
Across Pimco’s broader complex, more than 30 funds continued to have positive inflows during October across income, investment grade credit, high yield, long/short equity, mortgages and municipal strategies.
Recent market conditions and long-term performance have attracted investors to Pimco’s top performing income strategies.
For example, the Pimco Income Fund, overseen by Group CIO Dan Ivascyn, reached over $51 billion in assets under management in October, reflecting $11.5 billion in inflows since the start of the year, driven by strong performance, including a return of 3.49 percent year-to-date after fees.
“The Income Fund benefited from defensive positioning in the energy sectors and the recovery in the higher quality segments of the emerging markets,” Ivascyn said.
Pimco, a unit of German insurer Allianz SE, has had a more challenging year than most.
Last month, Bill Gross, who had managed the Pimco Total Return fund since its inception in 1987, sued his former employer Pimco and Allianz for $200 million, saying a greedy “cabal” of executives drove him out of the bond fund giant he helped found because they wanted his huge bonus for themselves.
The lawsuit ratcheted up the level of vitriol between Gross, who now works at Janus Capital Group Inc, and Pimco, which he built over four decades into a $2 trillion bond fund company. His ouster was announced on Sept. 26, 2014.
Pimco said the lawsuit had no merit. (Reporting By Jennifer Ablan; Editing by Alan Crosby and Christian Plumb)