PIMCO Total Return Fund, once the world's largest mutual fund under former manager William H. Gross, is within about $1 billion of being overtaken as the biggest actively run bond fund.
The fund's assets fell to $82.6 billion as of Oct. 31, the company said Wednesday on its website. That's a more than 70% drop from its peak in April 2013, as investors pulled money, and puts it within striking distance of being passed by the Metropolitan West Total Return Bond Fund, which by comparison has more than tripled in size over the past three and a half years to $81.5 billion at the end of last month.
PIMCO Total Return lost its ranking as the biggest mutual fund in 2013, a victim of rising interest rate fears and the broad investor shift toward indexing, even before Mr. Gross's exit in September 2014 spurred a rush of outflows. Its flagging fortunes reflect the long-term impact of losing a star manager, while MetWest's asset growth shows the faith investors place in a team that has worked together for two decades, according to Karin Anderson, an analyst with Morningstar.
“What a lot of people were looking for in the post-Bill Gross departure from PIMCO was a stable team — team being the key word,” Ms. Anderson said in a telephone interview. Morningstar gives the MetWest fund a gold rating and the PIMCO fund a bronze.
PIMCO is a more diverse firm than it was when it was best known for Mr. Gross' fund, according to spokeswoman Agnes Crane. “PIMCO has been broadening its offerings to meet client investment needs for years and we're stronger for it,” she said.
Even as the now team-managed PIMCO Total Return Fund has been losing investors, assets at Pacific Investment Management Co. were up 8% this year as of Sept. 30, reaching $1.55 trillion.
The MetWest fund returned 4.5% this year through October, compared with 4.6% for PIMCO Total Return. Over five years, MetWest's annualized returns were 4.6%, compared with 3.8% for PIMCO and 2.9% for the benchmark Bloomberg Barclays U.S. Aggregate bond index.
Doug Morris, a spokesman for MetWest parent TCW Group, declined to comment.
The largest fixed-income mutual fund now is the passively managed Vanguard Total Bond Market Index, which had $143.3 billion in assets as of Oct. 31. It has gained 5.2% this year and averaged 2.8% over the last five years.