Has Exodus From PIMCO's ‘BOND’ Begun?

September 29, 2014

With Bill Gross out at PIMCO, some assets may follow him.

A huge spike in trading volume Friday on the PIMCO Total Return ETF (BOND | B) suggests assets may be flowing out of the fund that, until Thursday, Sept. 25, was managed by Bill Gross, PIMCO’s legendary co-founder who resigned suddenly just before the firm was set to sack him.

Trading volume in BOND spiked to more than 5 million shares on Friday—more than 13 times the ETF’s average 30-day trading volume, according to data compiled by ETF.com. While volume data are ambiguous as to whether they reflect inflows or outflows, it seems a reliable guess that Friday’s volume spike means that some investors in BOND are cashing out and taking their assets elsewhere.

Indeed, the Wall Street Journal reported today that PIMCO had already lost $10 billion in assets, and Deutsche Bank is on the record forecasting that the Newport Beach, Calif.-based firm that Gross started 25 years ago could lose as much as $200 billion by the time the Gross-departure-related asset-bleed stops.

“I assume we’re going to see significant redemptions,” Dave Nadig, chief investment officer of ETF.com, said, underscoring how star quality is at the center of the success that active management in general has in attracting investor attention and assets.

BOND is the ETF version of the PIMCO Total Return Fund (PTTRX), a $221 billion portfolio that remains the single biggest actively managed bond mutual fund in the world.

Both PTTRX and BOND were managed by Gross.

Top 10 Volume Surprises, Funds >$50 mm AUM

Ticker Fund Average Volume
(30 Day)
1-Day Volume % of Average
BOND PIMCO Total Return 370,156 5,042,378 1,362.23%
ILB PIMCO Global Advantage Inflation-Linked Bond Strategy 6,678 70,391 1,054.11%
TZV iShares Target Date 2040 4,161 30,845 741.37%
ADRE BLDRS Emerging Markets 50 ADR 27,285 192,394 705.14%
ISTB iShares Core Short-Term USD Bond 17,373 119,705 689.03%
TLH iShares 10-20 Year Treasury Bond 25,930 163,770 631.59%
MLPA Global X MLP 61,776 381,705 617.88%
FAD First Trust Multi Cap Growth AlphaDEX 11,398 61,437 539.02%
SCHZ Schwab U.S. Aggregate Bond 143,396 767,223 535.04%
IDX Market Vectors Indonesia 103,528 550,287 531.54%

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