Asset management giant Pimco is still bleeding funds, seven months after the departure of its totemic investment chief Bill Gross in September.
According to figures released Tuesday by Pimco’s parent, the German insurance concern Allianz SE (AZSEY) clients withdrew another €68.3 billion ($73 billion at end-quarter exchange rates) from the company’s funds in the first three months of this year.
That might sound like a lot, but it’s a big improvement over the previous quarter, when investors had pulled €144.7 billion. They’d already pulled over €20 billion in the three days that followed Gross’s acrimonious departure to rival Janus Capital at the end of September.
Pimco’s Total Return Fund, Gross’s erstwhile flagship, has now lost the title of the world’s biggest mutual fund that it had held for years under his management, swelled by record returns that came as the Federal Reserve’s quantitative easing programs pushed bond prices to record highs.
Life has been harder for all bond funds in recent months, as the Fed has signalled its intention to start raising interest rates and return monetary policy to a more ‘normal’ stance. Gross himself earlier this month called an end to a secular bull market in bonds that had lasted decades.
He’s not the only one to spot that trend. Bond prices have backed up sharply in recent weeks, and the 10-year Treasury note now yields 2.34%, a seven-month high and up from up from a low of 1.64% in January.
Still, at least the bond whizzes at Pimco can console themselves that they don’t have to earn a living in Allianz’s home bond markets right now. German bond prices are falling even more sharply, as the markets fall out of love with the one-way trade prompted by the European Central Bank’s QE program. Yields on the German 10-year benchmark have soared from a mere 0.07% to 0.73% in the course of only three weeks.