Pimco ETF Suffers $10.9 Million Of Outflow On Gross Exit

Ted

FYI: Pacific Investment Management Co.’s main exchange-traded fund saw outflows of $10.9 million following yesterday’s surprise departure of Bill Gross, who co-founded and served as chief investment officer of the world’s biggest manager of bond mutual funds.
The $3.6 billion Total Return ETF, (BOND) which mimics the $222 billion Total Return Fund that was managed by Gross, has seen $81.9 million of withdrawals, or about 13 percent of assets, this year, according to data compiled by Bloomberg. Pimco, the Newport Beach, California-based unit of Allianz SE, manages about $1.97 trillion in total assets.
Regards,
Ted
http://www.bloomberg.com/news/print/2014-09-27/pimco-etf-suffers-10-9-million-of-outflow-on-gross-exit.html

msf

Someone please check my arithmetic.

$3.6B ETF, $81.9M net withdrawals.
$81.9/$3,600 = 0.0255 = 2.55%

Where is this 13% coming from?

(M* says that BOND has $3.57B, so the Reuters figure on fund size seems about right, even after the $10.9M withdrawal, which would be what, a third of a percent or so?)

I also suspect that what Bloomberg did to get the supposed $81.9M in net withdrawals was to take a previously reported figure of $71M and add $10.9M. They forgot that $71M was rounded to the nearest million; for all they knew, the "exact" figure was $71.1M. When you add rounded numbers, you keep the rounding - the most precise figure they could likely give for net outflows would be $82M, not $81.9M.

None of this is to suggest that PIMCO may not see large outflows. It's just to question basic arithmetic (and by implication, the reporting in general).

Another factoid - through August, YTD outflows on BOND were $50.4 million (note the precision). June, July, and especially August were big inflow months (+$87million in Aug alone). So the market had already turned swiftly and viciously on the fund - to have gone from +$87million in Aug to -$21million between Sept 1 and Sept 25th.

Given this background, was the $10.9 million outflow on Friday so extraordinary? (For all I know, the inflows continued for much of Sept, and just reversed on the recent announcement of the SEC probe. )

There's a footnote at the bottom of the Bloomberg article saying that the article was "corrected" to remove an explicit linkage between Gross' departure and the outflow. But then what, pray tell, is the point of giving a one day outflow figure from a fund right at the time of Gross' departure?

jlev

retracted on second reading

JohnChisum

Were there not outflows ongoing before the Gross departure?

msf

JohnChisum said:

Were there not outflows ongoing before the Gross departure?

Since the net outflows for the ETF YTD through August were $50.4 million, and the net outflows YTD excluding Friday (as near as I can tell, Reuters and Bloomberg agree on this figure) were $71 million, we can figure that the net outflows in Sept, prior to Gross leaving, were about $20 million.

What I don't have any citation or info for is whether the August inflows continued until a few days ago when the SEC inquiry was announced.

rjb112

msf said:

Someone please check my arithmetic.

$3.6B ETF, $81.9M net withdrawals.
$81.9/$3,600 = 0.0255 = 2.55%

Where is this 13% coming from?

@msf: Here's what I get: 2.275%



So yes, agree with you. Have no idea where this 13% is coming from.

msf

Thanks. Don't know where I came up with a slightly different figure than yours (I can't blame a typo, or at least I can't figure out how my fingers could have slipped that way), but at least we're close - and you're right.