Investors pulled $3.5 billion net cash out of Bill Gross's Total
Return Fund at Pacific Investment Management Co. in January, the
smallest amount since May, when the outflow started.
January's net redemption, released by fund tracker Morningstar
Inc. Tuesday, followed a record outflow of $41.1 billion out of Mr.
Gross's fund last year. It compared to a $4.2 billion outflow in
December. The Pimco Total Return Fund is the world's largest bond
fund by assets, with $237 billion under management.
The slower pace of redemption comes as Mr. Gross's fund posted
1.35% in total return in January, rebounding from a loss of 1.92%
last year, the biggest annual loss since 1994, according to
Morningstar. Total return includes price gain and interest
payments.
The developments likely offer a balm for Mr. Gross after a
tumultuous year of record client withdrawals and last month's
leadership shakeup.
Pimco announced in January that the high-profile chief executive
and co-chief investment officer, Mohamed El-Erian, would quit in
mid-March.
Mr. Gross, founder of Pimco, promoted a younger cadre of
managers as part of the efforts to shore up the firm's competitive
edge as its core business--traditional bond-fund offerings--has
been hit by investors' preference for alternative bond funds and
stock funds.
The Pimco Total Return fund, focusing on buying high-grade U.S.
bonds such as Treasurys, has been the poster child of core bond
funds. The fund took in $85.8 billion in new cash from 2009 through
2012 as investors sought refuge there amid global economic
turmoil.
The fund stumbled last year as Treasury prices sold off and
their yields climbed from historic lows amid a roaring U.S. stock
market.
But this year, the fund has gained ground, benefiting from a
broad rally in the U.S. fixed-income markets as U.S. stocks and
emerging-market assets sold off.
The Barclays U.S. Aggregate Bond Index, a broad gauge of U.S.
bonds and the benchmark for Mr. Gross's fund, gained 1.48% in
January.
In his January investment outlook, Mr. Gross said he expects
3%-4% total return for bonds this year following the negative
return last year.
"Total-return bond portfolios should float above water in 2014,"
said Mr. Gross. Still, he cautioned that positive returns are "no
guarantees."
Mr. Gross's fund holds a strong long-term track record. The fund
handed investors a total return of 6.1% on average in the past 10
years through Monday, beating 96% of its peers, according to
Morningstar.
"Pimco believes that fixed income should be a key part of any
diversified portfolio, whether it be institutional or retail, and
we still see plenty of opportunities in the global market for bonds
for the patient investor," said Mark Porterfield, Pimco's
spokesman, in an emailed statement Tuesday. Pimco is part of
Germany's Allianz SE (ALIZF, ALV.XE).
Write to Min Zeng at min.zeng@wsj.com
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