Unstructured Finance

Gross miscalculation?

By Jennifer Ablan and Matthew Goldstein

It appears that Bill Gross’s PIMCO Total Return Fund is losing ground with investors — just not as fast as we originally thought.

Morningstar, the mutual-fund tracker, initially told us that PIMCO’s flagship fund had suffered $17 billion in net outflows over the last 12 months. It turns out Morningstar discovered this morning that it miscalculated and the figure actually is $10.3 billion.

That’s slightly better news for Gross but the trend still holds that the fund is seeing  a steady stream of outflows. Morningstar estimates that in October and November of this year, PIMCO Total Return fund has seen $1.69 billion in customer redemptions.

And since November 2010, total outflows from the fund have been $12.3 billion. November 2010 was a critical month for Gross, also known as “the Bond King,” because it was the first time his fund had suffered outflows in about two years.

Morningstar also reports that over the past 13 months, the Total Return fund has seen outflows in 8 of those months. Last December, it was a particularly brutal month for Gross. Roughly $6.7 billion was withdrawn from the fund. And given this year’s poor performance, there is a strong chance this December’s outflow could be hefty too.

The confession season

By Matthew Goldstein and Jennifer Ablan

The year is not yet over and already the confessions are starting to roll in from some of the biggest U.S. money managers.

Bill Gross, manager of the world’s biggest bond fund, sent out a “mea culpa” letter late Friday to his many mom-and-pop investors, saying he’s sorry for putting up such bad numbers this year. Mea culpas from Pimco’s guiding light and the self-styled “bond king” are rare, largely because his Total Return Fund has long been one of the industry’s top performers.

But this year has been a tough one for Gross, who guessed wrong by betting heavily against U.S. Treasuries, which have turned out to be one of the biggest out-performers of 2011. The fixed income guru, who helps manage more than $1.2 trillion at Pimco, wasn’t farsighted enough to foresee a flight to Treasuries prompted by events like the European debt crisis, the battle over the U.S. debt ceiling and the general anemic state of the global economy.

Job Bank – Oct 14-15


The following are job changes within the financial industry for Oct. 14 – 15, linked where possible to personal profiles on LinkedIn. To inform us of other job changes, please e-mail moves@thomsonreuters.com.

The U.S. investment management firm hired Christopher Getter as senior vice president and emerging markets product manager, based in Newport Beach, California. Getter leaves Fidelity, where he was an emerging market debt research analyst.

The Canadian investment dealer appointed John Rothwell executive vice president and head of private client services, beginning Oct. 30. Rothwell was most recently president of Wellington West Capital.