Withdrawals from Pimco set fund management record

Pacific Investment Management Co (Pimco) suffered the most withdrawals in the history of fund management last year, with a total of $105 bn in redemptions after co-chief investment officers Bill Gross and Mohamed El-Erian resigned.

Investors withdrew $19.4 bn in December alone, leaving the company with $143.4 bn in assets at the end of the year, Pimco says in a press release on its website. The fund’s assets are now less than half what they were at its peak of $293 bn in 2013.

The withdrawals make 2014 the worst year for any fund in history in terms of client redemptions, according to data compiled by Bloomberg News.   

‘You could still see some more outflows and then it [will] probably stabilize, unless performance really deteriorates,’ says Michael Rosen, chief investment officer at Angeles Investment Advisors in Santa Monica, California, in an interview with Bloomberg.

The redemptions reached a monthly record of $27.5 bn in October after Gross, who co-founded Pimco in 1971, resigned amid speculation over differences of opinion with other staff members. El-Erian quit at the beginning of the year, also amid speculation he had personal differences with Gross. Gross joined Janus Capital, a much smaller rival of Pimco, and El-Erian joined Allianz.

Pimco, which is now run by long-time staffers including new chief investment officer Daniel Ivascyn, has tried to convince investors the outflow is slowing to a halt. ‘The pace of outflows during December continued to be significantly below the peak in September and early October 2014,’ says Daniel Tarman, a Pimco spokesperson, in the firm’s press release.

‘The fund’s experienced portfolio management team remains focused on pursuing investment opportunities designed to play out over the medium and long term, while retaining a focus on capital preservation and liquidity for shareholders.’