Tags: Gross | Pimco | fund | Treasurys

Bond Rout Hammers Pimco Total Return Fund

Thursday, 27 Jun 2013 11:36 AM

By Dan Weil

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The Pimco Total Return Fund, managed by "bond king" Bill Gross, has tanked along with the bond market in recent weeks.

The world's largest mutual fund dropped 3.65 percent in the first 25 days of June, placing it 12th worst among 177 similar bond funds tracked by Lipper research firm, The Wall Street Journal reports.

May wasn't a walk in the park for Gross' fund either. Investors grabbed back $1.32 billion from Pimco Total Return, its first outflow in two years. The fund's share price fell 2.2 percent last month.

Editor's Note:
Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

It has suffered from the plunge of Treasurys, according to The Journal. The 10-year Treasury yield hit a 22-month high of 2.66 percent Monday.

Gross bought 10-year Treasury notes in April, and the strategy paid off that month. But Treasurys began falling in May amid concern that the Federal Reserve will taper its quantitative easing (QE).

And the selling accelerated after Fed Chairman Ben Bernanke said last Wednesday that the central bank may indeed cut back on QE later this year if economic growth meets its expectations.

To be sure, Gross' long-term returns are stellar. Both the bond market and Pimco Total Return rebounded Wednesday after a downward revision of first-quarter gross domestic product growth to 1.8 percent.

"We are still in a low-growth environment," Jay Mueller, a bond fund manager at Wells Capital Management, told Bloomberg.

"The selloff in rates was fast, and we are seeing some retracement. Rates should stay near these levels until we get closer to the Fed actually intervening. And that will depend on the economy."

Editor's Note: Tiny Loophole Found in 70,320 Page IRS Tax Code Could Pay $87,500

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