The number of public pensions that have put Pimco on watch or are expected to do so keeps growing.
The latest: the Hawaii Employees' Retirement System, which was likely to put the firm on watch at its Oct. 20 board meeting because of the departure of Pimco founder Bill Gross.
The San Francisco City & County Employees' Retirement System also is considering dropping Pimco.
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News of Gross's departure from Pimco sparked $23.5 billion in redemptions from the firm's flagship Total Return Fund in September, the largest rate of monthly withdrawals for the fund on record, according to Morningstar.
That represents about 10 percent of the fund's assets, which were $221.6 billion at the end of August.
Institutions have been shedding Pimco holdings for much of the past year, as the several of the firm's key funds underperformed, and news of the friction at the highest levels of management continued to leak to the press.
Further redemptions seem likely, as institutional investors continue to report either dropping Pimco funds or placing them on "watch lists."
The Hawaii Employees' Retirement System, valued at $14.1 billion, has about $550 million with Pimco. Others considering similar moves include the Texas Municipal Retirement System, which has $2 billion of its $23.4 billion fund with Pimco.
One the nation's largest pension fund isn't waiting. The Florida State Board of Administration, which oversees pensions with $174.7 billion in assets, has said it will move more than $1 billion of Pimco holdings from the Florida Retirement System's defined contribution plan, which has $8.5 billion in assets.
Administrators have also said they will reduce $1.9 billion of Pimco's core fixed-income portfolio from the Florida's main defined benefit plan, valued at $145 billion.
Smaller, local pensions are also redeeming their holdings. The Austin Firefighters' Relief & Retirement Fund is moving its $80 million holding in the Total Return Fund, which represents about 10 percent of its total value.
And the Imperial County Employees' Retirement System has also reported it will drop its assets in the Total Return Fund, citing organizational changes as the reason.
Charles Schwab has removed the Total Return Fund from its 10 target date funds. Under Gross's management, Schwab had used the fund as one of its top 10 holdings in its TDFs.
Also, investors in U.S.-based mutual funds pulled a record $21 billion out of taxable bond funds in the latest week after Gross's surprise resignation, according to the Investment Company Institute.
The outflows from taxable bond funds in the week ended Oct. 1 were the biggest since weekly records began in 2007, according to the data from ICI, a mutual fund trade organization.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
