(Adds interview with Pimco Group CIO Ivascyn, December fund
By Sam Forgione
NEW YORK Jan 6 Investors pulled $3.2 billion
from the Pimco Total Return Fund, once the world's largest bond
fund, in December, bringing last year's total cash withdrawals
to $16.1 billion, Morningstar data showed on Friday.
The Pimco Income Fund, which Pimco Group Chief Investment
Officer Dan Ivascyn told Reuters on Friday has increased its
exposure to safer securities in recent weeks, posted net inflows
of $1.5 billion last month for a total cash inflow of $13.7
billion in 2016.
Pimco's U.S. open-end mutual funds collectively posted $1.7
billion in net outflows last month for 2016 total cash outflows
of $16.6 billion.
Pimco Total Return, which hit a peak of $292.9 billion in
assets under management in April 2013, now has $75.7 billion in
assets. The Income Fund, overseen by Ivascyn and widely seen by
investors and analysts as Pimco's new flagship fund, now has
assets under management of $70.3 billion, according to
Last year, the Pimco Total Return Fund returned 2.6
percent, lagging 63 percent of its intermediate-term peer
category, according to Morningstar. For the same period, the
Pimco Income Fund returned 8.3 percent, surpassing 63 percent of
its multisector bond category.
In December alone, the Total Return Fund gained 0.7 percent
to beat 94 percent of its peers, while the Income Fund gained 1
percent to beat 61 percent of its peers, Morningstar data
The Pimco Income Fund's exposure to higher-quality
securities such as U.S. Treasuries, U.S. agency mortgages, and
Australian government bonds has risen significantly in the past
several weeks while the fund's exposure to riskier U.S.
corporate bonds has fallen, Ivascyn said.
Ivascyn said that move had been implemented given
uncertainty surrounding U.S. President-elect Donald Trump's
policies and because the market seemed to be factoring in an
extremely low probability of recession and other sources of
"We think U.S. Treasury bonds, high-quality bonds, are
priced more fairly than at any point in the last year or so," he
said. Ivascyn said that, despite Treasuries being fairly priced
currently, the benchmark 10-year yield could still rise to the
low 3 percent range over the next 12 months.
U.S. 10-year yields, which hit a more than
two-year high of 2.641 percent in mid-December, were last at
Pacific Investment Management Co, a unit of German insurer
Allianz SE, is based in Newport Beach, California. It
had about $1.55 trillion in assets under management at Sept. 30.
(Editing by Jeffrey Benkoe; Editing by Lisa Shumaker)