Bill Gross has long been known as the bond king. He's been the driving force behind the PIMCO family of mutual funds that currently manages around $2 trillion. But poor performance in his PIMCO Total Return Fund (MUTF:PTTAX) and the unexpected departure of his co-chief investment officer Mohamed El-Erian have taken some shine off of the king's crown. After years of solid returns that built the fund into what was at one time the largest mutual fund in the world, recent performance has begun driving billions of dollars out the door.
Gross managed to rack up 13 consecutive years of gains for Total Return up until 2013 when the fund lost 2.3%. Looking at recent average annual returns and risk ratings, the fund now looks like an average, if not below average, investment. 2014's 1.3% first quarter return trailed 73% of peer funds. The fund's one-year return of -1.6% significantly trailed its benchmark's -0.1% return. Morningstar now rates the fund just 2 stars out of 5 over the 3-year period, noting high risk and below average returns. As a result, investors have been looking for better performance elsewhere, withdrawing a total of $41.1 billion in 2013 and another $8.2 billion so far in 2014.
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