Global investment management firm Pacific Investment Management Company (Pimco) underperformed its peers last month, according to estimates by data tracker Morningstar, following internal strife at the company and the abrupt exit of CEO Mohamed El-Erian.
“Pimco was the only provider among the top 10 firms by assets under management that had outflows in February,” Morningstar said in its U.S. open-end asset flows update late Wednesday.
Nontraditional bond funds – those that have strategies that don’t follow conventional practices – saw some of the best inflows for the sector, according to the research firm. But it said that investors have “clearly moved away” from Pimco’s Unconstrained Bond in favor of products from Goldman Sachs, BlackRock and JPMorgan.
In the high-yield arena, Pimco was also the standout laggard. Morningstar estimates show that Pimco’s High Yield Fund bucked the trend of inflows for the category with investors withdrawing $510 million in February.
“The underperformance of the fund relative to its peer group is a new phenomenon that also worries investors,” Bill Blain, a senior fixed income broker at Mint Partners told CNBC via email.
Pimco had $518 billion of assets under management last month, according to the report, with 4.6 percent of the market share. An estimated $2.49 billion flowed out of the company’s funds last month, after $5.6 billion left in January and a total of $56 billion leaving in the last year.
A year ago Pimco’s assets under management stood at $583 billion, according to Morningstar, reaching a peak of $590 billion in May before falling. This is in stark contrast with the competition with Franklin Templeton, Fidelity and Vanguard all seeing their assets rise in the last 12 months.
Pimco was not immediately available for comment when contacted by CNBC.
Pimco has become something of a reverse indicator for many investors, Blain believes. He added that the dissent on the floor at Pimco has also got many wondering about succession issues. Reuters reported Tuesday that several U.S. institutional investors are closely monitoring the developments at Pimco. This comes in the wake of Mohamed El-Erian’s abrupt resignation as CEO. Last month in The Wall Street Journal in February ran a feature on the turmoil at Pimco, highlighting acrimony between the departing El-Erian and co-founder Bill Gross. Gross has since disputed the portrayal in an interview with CNBC.
The reports and latest figures heap more pressure on the company after a dismal 2013. The Vanguard Total Stock Market Index overtook Pimco’s flagship Total Return Bond as the world’s largest mutual fund in 2013. Overall, customers withdrew $41.1 billion from Pimco’s Total Return Fund last year, according to Morningstar.
The fund – which is managed by Gross – has also weighed heavy on Pimco’s recent general outflows with $3.5 billion leaving the fund in January and $1.6 billion leaving in February, according to Morningstar. However, over the longer term, this stalwart of the bond fund sector has delivered a total return of nearly 8 percent since its inception, outpacing its rivals.
Peter Chatwell, an interest rate strategist at Credit Agricole Corporate and Investment Bank believes that recent outflows could just be indicative of sentiment towards this flagship fund and not of Pimco as a whole.
(Read more: Gross on Pimco: Better ‘than we were before’)
“(The bond fund) is the bellwether of sentiment in bond markets. At the turn of the year a bear-market in U.S. Treasurys was a consensus position, so it is logical to expect to see the largest/highest profile fund seeing outflows,” he told CBC via email.
Many critics have pointed at Gross’s favorable outlook on U.S. Treasurys with yields being volatile as the Federal Reserve moderates its bond-buying program. Blain told CNBC that some investors believe that Gross has called Treasury moves wrong too many times and Pimco – and owners Allianz – could be ready to make changes.
“Pimco and Allianz are clearly worried – concerned they suffer as the firm wobbles on Bill. If he is identified as the problem, it’s possible he may be sidelined to quell outflows,” he said.
—By CNBC.com’s Matt Clinch. Follow him on Twitter @mattclinch81.