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PIMCO's Big Cash Haul

The latest flow trends, plus a top manager takes a break.

Morningstar Analysts, 09/21/2009

Morningstar's fund analysts cover 2,000 mutual funds. Their full analyst reports, including Stewardship Grades, are available in Morningstar Principia Mutual Funds Advanced and Morningstar Advisor Workstation Office Edition.

Fund firms are well on their way to erasing the $251 billion in outflows they experienced in the second half of 2008, according to Morningstar fund flow data. This year, through Aug. 31, 2009, investors have poured more than $226 billion into U.S. open-end funds. In August, $54 billion flowed into U.S. open-end funds, making it the single biggest month of inflows since February 2007.

Investors are still giving equity funds the cold shoulder, said Morningstar editorial director Sonya Morris. Fixed-income funds have received the majority of inflows this year. About 60% of August's flows went into taxable-bond funds, and muni funds soaked up another 20%.

The biggest beneficiary of these trends is PIMCO. Its PIMCO Total Return PTTRX is the top-selling fund of the year. August inflows of $5.5 billion pushed the fund to a jaw-dropping $177.5 billion in net assets, Morningstar data show. To put that figure into context, PIMCO Total Return alone now represents 13% of the entire taxable-bond mutual fund universe. And it's almost twice as big as the second-largest mutual fund, Vanguard Total Stock Market VTSMX. PIMCO Total Return is up 11.65% for the year through Sept. 15 versus the Barclays Capital Aggregate Index, which is up 4.9% during that period.

Other bright spots in August fund flows include two Morningstar Fund Analyst Picks: Templeton Global Bond TPINX, which took in $1.3 billion for the month (bringing total inflows to $5 billion for the year so far) and Dodge & Cox Income DODIX, which took in $1.2 billion, pushing its 2009 total to $1.7 billion, according to Morningstar estimates.

Most major fund firms experienced inflows in August. The exception was American Funds, which is still second on the list of largest fund firms with assets under management of $848 billion, despite seeing outflows of $2.6 billion in August and $17.4 billion for the year to date, according to Morningstar estimates. Vanguard continued to shore up its position as the largest fund family with more than $9 billion in inflows in August, bringing its year-to-date total to $66 billion and its total mutual fund assets to $961 billion, according to Morningstar estimates.

American Century Vista Manager Takes Leave
Glenn Fogle, portfolio manager of American Century Vista TWCVX since 1993 and a recently named CIO at the firm, has taken a leave of absence. Bradley Eixmann, the comanager since early 2007 who was an analyst on the fund before that, has moved up to lead manager. Vista lost a staggering 48.7% in 2008, more than most of its mid-growth peers. It's up about 18% so far in 2009 but still lags the majority of its category rivals.

Turnover has become an unsettling trend at American Century. In April of this year, Fogle was named CIO for American Century's U.S. growth equity--mid & small cap team. Steve Lurito had a short tenure as CIO for the firm's growth-stock funds before departing, and his responsibilities were split between Fogle and Greg Woodhams, who became CIO for U.S. growth equity--large cap.

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