PIMCO's assets under management fell 5.17% in the third quarter, according to figures the firm released Friday. As of Sept. 30, the fixed-income shop had $1.876 trillion in AUM vs. $1.973 trillion on June 30, which represents a drop of $97 billion.
"Changes in AUM are a function of a number of factors, including portfolio returns, currency changes and net client flows," PIMCO said in a statement. Its various funds had "a range of returns and client flows for the quarter."
On Oct. 1, PIMCO said net outflows from the Total Return Fund, formerly managed by Bill Gross—who left the firm abruptly in late September to join rival Janus Capital Group—were an estimated $23.5 billion. "Of note," the company explained, "the largest daily outflow occurred on the day of Bill Gross' resignation from the firm, while outflows on the two following days were considerably smaller." Recently, Jeff Tjornhoj, head of research for Lipper-Americas, gave his view on Gross' departure from PIMCO, calling it "the biggest news for bond funds [in] this past quarter" and attributing the move to "internal strife with executive management [that] grew too distracting for either side to bear."
Gross left "before he could be fired," Tjornhoj explained. "It was a watershed moment for the fund industry to see a titan such as Bill Gross lose control of one of the largest mutual funds in the world. We'll be curious to see how the next chapter of his career evolves at Janus."
Meanwhile, PIMCO says investors are "showing confidence in PIMCO," as demonstrated by the roughly $6.5 billion that has moved into the PIMCO Income Fund.
Last week, Morningstar said it "still likes" the Total Return Fund, despite its continued spate of outflows. The research group downgraded its rating on the fund to bronze from gold following Gross' career move.
"The underlying material that has driven the [Total Return] fund is still there," said Eric Jacobson, senior analyst of active strategies, on a Wednesday conference call.
John Hale, Morningstar's director of manager research for North America, added that while the Total Return Fund has seen "significant outflows," PIMCO has "sufficient liquidity" to handle those outflows—at least in the short-term.
