With the bears hanging on for dear life in the markets, prompting stock investors to race for the doors in a bid for quality, the once-dominant Vanguard 500 Index Fund has lost its perch as the nation’s largest mutual fund to the Pimco Total Return, a bond portfolio, Reuters reported.
The Pimco fund’s assets, managed by the high-profile Bill Gross, ballooned to $64.6 billion at the end of September, a Pimco representative reported to Reuters.
Meanwhile, a spokesman for the Valley Force, Pennsylvania-based Vanguard Group said its 500 Index fund, a passively managed portfolio that mimics the Standard & Poor’s 500 stock index, finished the month with $62.8 billion.
Pimco Total Return recently surpassed Fidelity Investments’ Magellan fund in assets.
“This is not a reflection of the popularity of index funds,” John Woerth, the Vanguard spokesman, told Reuters. “This simply is a reflection of the bond market going up and the stock market going down. Index funds are still popular despite two and a half years of bear market.”
Vanguard 500 Index — down 28.2% so far this year — still has attracted $1.3 billion from investors over the last 12 months, according to Financial Research Corp. of Boston.
But performance has dragged the fund’s assets down from a level of roughly $70 billion at the end of July.
Investors at the same time have poured $11.8 billion into Pimco Total Return over the last 12 months, data showed.