(Adds law firm investigation)
By Jennifer Ablan
NEW YORK, Dec 17 (Reuters) - Pimco posted a record total outflow of $5.8 billion from its emerging market funds in the first 11 months of 2014, according to Morningstar data released on Wednesday.
Pimco's funds have suffered from ill-timed investment bets in Russia, Ukraine, Brazil and Venezuela along with the ongoing flight by investors from emerging markets and the management shakeup following the dramatic departures of co-founder Bill Gross and Chief Executive Officer Mohamed El-Erian.
The year-to-date outflow figure for Pacific Investment Management Co's emerging market bond funds, a sector where the company is the global market leader, is nearly three times the total 2013 outflow of $2.0 billion, mutual-fund data provider Morningstar said.
Pimco's $1.87 trillion asset base, which gives it the ability to play a dominant role in the U.S. Treasury and other major bond markets, may not provide it with such an advantage in illiquid emerging debt markets where large investments can be difficult to exit and losses can mount when prices drop.
Pimco gets caught in "a vicious circle" as wrong calls lead to fund redemptions by investors. That in turn forces it to sell bonds into a volatile market, driving the prices of remaining holdings down even further, said Todd Rosenbluth, director of mutual fund research at S&P Capital IQ.
The $9.8 billion Pimco Emerging Local Bond Fund, which invests primarily in local currency government bonds in emerging markets, has had outflows of more than $1.6 billion in the 11 months ended Nov. 30.
Year-to-date returns were down 8.3 percent as of Tuesday, behind the J.P. Morgan Global Bond Index-EM Global Diversified Composite Unhedged, which is down 8.2 percent.
The $3.3 billion Pimco Emerging Markets Bond Fund, which focuses on external-currency debt denominated in U.S. dollars, has been cut in half this year through the end of November with net outflows of $3.3 billion, Morningstar added.
Year-to-date returns were down 4.6 percent as of Tuesday, behind the J.P. Morgan Emerging Markets Bond Index Global Composite, which is up 1.2 percent.
At the same time, the $1.37 billion Pimco Emerging Markets Corporate Bond Fund, which invests in fixed income securities issued by corporations in emerging markets, has had outflows of $876 million.
Year-to-date returns were down 4.8 percent as of Tuesday, behind the J.P. Morgan Corporate Emerging Markets Bond Index Diversified Composite, which is up 3.3 percent.
Law firm Girard Gibbs LLP said on Wednesday it is "investigating potential claims on behalf of investors who purchased shares in the Pimco Emerging Markets Bond Fund concerning possible violations of federal and state securities laws.