Most Assets

The funds that attracted the most assets in the previous four years experienced some of the biggest withdrawals. The world’s largest bond fund, Pimco’s Total Return Fund, for example, reported $8.3 billion of outflows in the first three months of 2014. That overwhelmed $6.4 billion of inflows into the rest of funds in its category, Morningstar data show.

The largest bond-fund managers have been able to amass a disproportionate amount of securities over the past five years partly by getting first dibs on new corporate-bond sales. The SEC is also investigating whether banks are fairly divvying up new issues and whether they give preferential treatment to top clients.

Bankers gave almost half of Verizon Communications Inc.’s record $49 billion bond sale in September to just 10 companies, people with knowledge of the matter said at the time. The price instantly jumped, handing those buyers about $2.5 billion in gains just one day after issuance.

Pimco Buys

Newport Beach, California-based Pimco purchased $8 billion of the Verizon debt and BlackRock bought about $5 billion, people familiar with the sale said at the time. Fink, 61, is chief executive of New York-based BlackRock and Gross, 70, is chief investment officer and co-founder of Pimco.

Robert Varettoni, a spokesman for Verizon, declined to comment on last year’s bond sale.

“With the bond market you want to be big,” said Michael Rawson, an analyst at Morningstar in Chicago. “If you’re too small, it’s hard to get a decent allocation and good pricing.”

Being big can cut costs by having many different funds rely on the same people to trade, analyze and process specific bonds.

“They can lower their fees,” said Andrew McCollum, a managing director at Greenwich Associates in Stamford, Connecticut. “That’s the reason the big managers are getting bigger -- they can basically do the same thing for a lower cost.”

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