By Min Zeng and Kirsten Grind
Pacific Investment Management Co.'s mutual funds suffered a 10th
straight month of redemptions in March, although Pimco's chief
executive said there is no link between the firm's management
turmoil and fleeing investors.
Investors pulled $7.3 billion out of Pimco last month--following
outflows of $2.5 billion in February and $5.7 billion in
January--to lift the first-quarter total to more than $15 billion,
according to fund tracker Morningstar Inc.
The outflows come even as the U.S. mutual fund industry overall
has attracted new cash. In March, stock and bond funds and ETFs
posted $26.5 billion inflows and $80.6 billion in new investments
in the first quarter, according to fund tracker TrimTabs Investment
Research.
The latest setback for Pimco underscores the challenges
confronting the Newport Beach, Calif.-based money manager following
a year of record redemptions and a management shake-up.
Pimco, a unit of German financial-services firm Allianz SE, had
$1.91 trillion in global assets under management at the end of
December. The firm had $30 billion in withdrawals in 2013,
according to Morningstar.
Pimco Chief Executive Douglas Hodge on Wednesday defended the
recent executive movements at the giant money-manager, and said
there is "no evidence" the changes at the top have led to client
outflows.
"There's no evidence that the outflows are the result of any
management changes here," Mr. Hodge said in an interview. "When we
have conversations with clients, they unambiguously endorse the
changes that we have made."
Pimco announced in January that its high-profile CEO and
co-chief investment officer, Mohamed El-Erian, would leave in
mid-March.
The decision shocked many in the investing community in part
because Mr. El-Erian had been groomed as the successor to co-Chief
Investment Officer Bill Gross, Pimco's high-profile fund
manager.
A Feb. 25 article in The Wall Street Journal reported that a
deteriorating relationship with Mr. Gross was among the reasons
behind Mr. El-Erian's decision to leave the firm.
In his place, Pimco added six new deputy chief investment
officers at the firm and named Mr. Hodge chief executive.
Mr. Hodge said Pimco clients are wary of risk in the bond
market, and pointed to other areas of the firm with client inflows,
including its private-equity division and a recently launched
mutual fund in Canada.
He cited several recent wins at the firm: Pimco in early March
raised $5.5 billion to buy bank assets in the U.S. and Europe, a
fund that will be led by one of the new deputy chief investment
officers, Daniel Ivascyn.
Adrian Miller, a global market strategist at GMP Securities LLC,
said Pimco's image has been "somewhat damaged" by the events
surrounding the surprise departure of Mr. El-Erian.
At Pimco, both stock and bond funds suffered in March. The
firm's bond funds posted $5.6 billion in outflows, while stock
funds had $466.2 million in redemptions.
The Pimco Total Return Fund, the firm's flagship bond fund,
suffered $3.1 billion in outflows last month. The fund saw its
assets decline to $232 billion at the end of March, down from
$236.5 billion in February. It remains the world's largest bond
fund by assets.
One of Pimco's competitors, the fund family DoubleLine, has
posted recent inflows. According to DoubleLine, their mutual funds
saw inflows of $441 million in March, and $487 million in the first
quarter.
Write to Min Zeng at min.zeng@wsj.com and Kirsten Grind at
kirsten.grind@wsj.com
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