Metropolitan West Total Return Bond Fund Class M (MWTRX), an actively managed bond fund run by investment manager The TCW Group, recently dethroned rival PIMCO Total Return Fund Institutional Class (PTTRX) to become the world's largest fund in the space.
A Fund Dethroned
This development ended the PIMCO fund's more than 20-year reign, according to The Wall Street Journal. While PTTRX dominated the space for some time, commanding nearly $300 billion worth of assets at one point, this legendary fund has suffered massive outflows within the last five years. These outflows have caused its assets under management (AUM) to fall to roughly $78.5 billion, Google Finance data reveals.
This most recent figure represents a 73% decline from the all-time high of $293 billion in April 2013. The Metropolitan West (MetWest) fund, on the other hand, boasted AUM of $79.4 billion at the time of report on December 7, additional Google Finance figures show.
PIMCO Fund's Meteoric Rise
The PIMCO Total Return Fund has repeatedly generated impressive returns and asset growth, more than doubling its AUM from $132 billion at the end of 2008 to $293 billion in April 2013, Bloomberg data reveals. However, the fund suffered uneven performance and outflows when the Federal Reserve signaled in 2013 that it would begin dialing down its monetary stimulus. (For more, see also: How to Calculate Your Investment Return.)
The PIMCO fund did establish a history of frequently outperforming competitors, with Bloomberg reporting November 4, 2014 that the fund had produced better returns than 63% of its peers over the last five years. However, this strength faded more recently, as the fund's returns had fallen short of 65% of its peers in the last 12 months.
Fall From Grace
Investors began withdrawing significant amounts after the PIMCO fund hit its peak in April 2013, with AUM declining $70 billion through August 2014, according to MarketWatch. When co-founder Bill Gross left the fund in September, investors responded by accelerating these redemption requests. The fund lost $23.5 billion that September and $27.5 billion the following month. Gross resigned from PIMCO over disputes with other members of management, individuals familiar with the matter told Bloomberg. (For related reading, see: The Greatest Investors: William H. Gross.)
Only the Strong Survive
The MetWest fund has benefited not only from the turmoil at PIMCO, but also a bull market in bonds that helped push yields to record lows. This particular fund has also returned an annual average of 5.94% over the last 10 years, putting it ahead of all but one of 293 competitor funds, Morningstar data reveals.