In the earlier part of this year, Bill Gross sold all of PIMCO’s treasury holdings, and started shorting Govt. securities. Bill Gross later covered his short and stated ““Do I wish I had more Treasuries? Yeah, that’s pretty obvious,” “I get that it was my/our mistake in thinking that the U.S. economy can chug along at 2 per cent real growth rates. It doesn’t look like it can.”
Now Gross is facing outflows from investors.
Bill Gross’s PIMCO Total Return Fund, the world’s largest bond fund, keeps shrinking as investors look to put their money with some of his competitors.
In November, the mutual fund led by Gross saw about $500 million in outflows, bringing its cash outflow over the past 12 months to $17 billion, said Morningstar editorial director Kevin McDevitt.
By contrast, November was a banner month for most other taxable bond funds, which took in nearly $10.2 billion in money as a group, according to Morningstar. Over a 12-month period, taxable bonds fund accumulated $105.8 billion in new money.
An outflow of $17 billion might not seem too bad for a fund that still oversees $241 billion in assets, but it’s an indication that investors are losing some faith in Gross, whose fund has underperformed all year and in November once again missed out on a big move away from stocks and other risky assets and into bonds and Treasury notes.
“The PIMCO Total Return fund has been seeing a steady stream of outflows,” McDevitt added. “Gross’s fund has underperformed this year and a lot of it goes back to his misplaced bet on Treasuries.”
Pacific Investment Management Co., or PIMCO, did not immediately return calls or emails seeking comment.
Based in Newport Beach, California, PIMCO oversees more than $1.35 trillion in assets. It came under heavy criticism earlier this year when Gross bet heavily against U.S. Treasuries, which have turned out to be one of the biggest outperformers of 2011.