This was the year investors were supposed to make a great rotation from bond funds into stocks, but bonds are actually having a great year — unless we’re talking about Bill Gross and his Pimco Total Return Fund (PTTRX).
Take a blown call here, an embarrassing public spat there, and an extended period of underperformance, and institutional investors are beating a steady retreat from Pimco Total Return. Indeed, Total Return just suffered its 13th straight month of outflows, according to data from fund-tracker Morningstar.
Investors pulled another $4.3 billion from Pimco Total Return in May — or 1.9% of net assets — and that was during a period in which the bond fund finally beat its benchmark, gaining 1.3% vs. a 1.1% rise in the Barclays Aggregate index.
However, May was a rare win for Bill Gross and Total Return. For the year-to-date, PTTRX is trailing its benchmark with a gain of just 3.32% vs. a 3.87% increase in the Barclays Aggregate. The sluggish year-to-date performance has Pimco Total Return also lagging its peers, ranking at 80 in its category.
Bill Gross still might be the greatest bond fund manager in history, but he sure hasn’t been the king this year. It’s not hard to find bond funds that are beating Pimco Total Return in 2014, but some really do stand out. To compare apples-to-apples, we only looked at bond funds in the same category as PTTRX with similar risk profiles and that are open to new investors.
That led us to these three better bond funds than Pimco Total Return: