By Sam Forgione
NEW YORK (Reuters) - Bill Gross's Pimco Total Return Fund, the world's largest bond fund, lost $41 billion of its assets in the past four months through withdrawals and price losses, according to data from Morningstar Inc on Wednesday.
The Pimco Total Return Fund, which had $7.7 billion in net cash outflows in August alone, has seen its assets shrink by 14 percent to $251 billion at the end of August from $292 billion at the end of April, Morningstar added.
Investors have pulled cash out of bond funds this year as rising interest rates have made fixed-income securities vulnerable to price losses. Gross and his co-chief investment officer at Pimco, Mohamed El-Erian, are watched closely because they have made money by anticipating big moves in the economy and interest rates way before other investors.
Investors have pulled about $26 billion from the fund since the start of May, Morningstar data shows. In addition, the fund sustained losses of roughly $15 billion over that period as the fund has declined 5.5 percent since the end of April, preliminary data from Morningstar shows.
Gross's performance has likely suffered as a result of bets on Treasury Inflation-protected Securities or TIPS, emerging market debt and corporate credit, said Morningstar fund analyst Michael Rawson.
The latest monthly withdrawals accelerated after outflows of $7.5 billion in July. The fund fell 1.07 percent in August, according to preliminary data from Morningstar, better than just 9 percent of other U.S. open-ended intermediate-term bond funds.
The preliminary data showing a drop in the fund's performance in August also marked a downturn from July, when the fund rose 0.49 percent. So far this year, the fund is down 3.86 percent, according to Pimco's website.
Investors withdrew cash from bond funds in August on expectations of a pullback in the Federal Reserve's $85 billion in monthly purchases of Treasuries and mortgage-backed securities.
Investors pulled $39.5 billion from bond mutual funds and exchange-traded funds in August through August 28, data from research provider TrimTabs showed.
Interest rates also rose on the worries surrounding the Fed. The yield on the benchmark 10-year U.S. Treasury note hit a two-year high of just over 2.93 percent on August 22. Treasury yields move inversely to prices.
The Pimco Total Return Fund had 39 percent of its holdings in U.S. government-related securities at the end of July, data from the firm's website has shown.
The Newport Beach, California-based Pacific Investment Management Co, a unit of European financial services company Allianz SE, had $1.97 trillion in assets as of June 30, according to the firm's website.
Investors also pulled $94.6 million from the Pimco Total Return Exchange-Traded Fund, an actively-managed ETF designed the mimic the strategy of the flagship bond fund.
While those outflows were down modestly from outflows of $137 million in July, they still marked the fourth straight month of outflows from the ETF, according to Morningstar.
The DoubleLine Total Return Bond Fund, meanwhile, had $1.13 billion in estimated outflows in August, marking its third straight month of withdrawals from the fund.
The outflows from the fund, run by Jeffrey Gundlach, accelerated after withdrawals of $580 million in July. The latest outflows also lowered the fund's assets to roughly $36.8 billion, Morningstar said.
Gundlach's fund fell just 0.31 percent in August, better than 94 percent of peers, preliminary data from Morningstar shows. So far this year through August, the fund is down 0.88 percent, also above 94 percent of peers according to preliminary Morningstar data.
The Los Angeles-based DoubleLine Capital, where Gundlach serves as chief executive and chief investment officer, oversees roughly $57 billion in assets.
(Editing by Jennifer Ablan, Chris Reese and Tim Dobbyn)