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Gross’ Pimco Total Return sees $9.9bn outflows as investors flee bonds

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Pimco’s Bill Gross

Bill Gross’ Pimco Total Return fund was hit by a record $9.9bn (£6.5bn) in outflows last month as investors panicked over how the Federal Reserve’s eventual tapering of quantitative easing would affect the bond market.

The fund, which is the largest in the world with assets under management of $268bn, has suffered during the heavy sell-off in government bonds that has taken place over recent weeks.

Bloomberg shows Pimco Total Return has lost 2.9 per cent over the year to date, meaning it underperformed 92 per cent of comparable funds. Gross has invested heavily in government debt this year, leaving the fund exposed to the sell-off.

June’s net outflow of $9.9bn beat the fund’s previous record of $6.7bn, which was set in December 2010, according to Morningstar. Over the month, the portfolio fell from $285bn to its current $268bn after the combination of outflows and losses.

In May, Gross called the end of the 30-year bull market for bonds after yields reached a low and prices peaked in late April.

“You need to look at an amalgamation of Treasuries, mortgages and corporates, and not just Treasuries,” the manager said.

“Measured on that basis, [29 April 2013] has been the price high and yield low, to this point.”

The latest data from EPFR Global shows a record $23.3bn (£15.3bn) was pulled from the bond funds it tracks in the week ending 26 June 2013 after Fed chairman Ben Bernanke said the bank’s $85bn-a-month QE programme could slow later this year.

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