Many people are interested in an ongoing assessment of PIMCO and PIMCO funds, given the developments within the firm over the past year and the attention it has garnered in the media. The recent Wall Street Journal article, “Pimco Total Return Fund Outpaces Most of Its Rivals,” may come as a surprise to those who have been reading PIMCO’s press.
Somewhere amidst all the upheaval, PIMCO Total Return has quietly managed to outperform 92 percent of its peers since Bill Gross left at the end of September.1
Starting with the departure of Mohamed El-Erian in January 2014, PIMCO has provided no shortage of headline stories, from Bill Gross’s leave-taking (and the events leading up to it) to performance and outflows in the Total Return fund. The “sky is falling” nature of the reporting is one of the reasons we discourage clients from paying too much attention to the financial media.
Unfortunately, people who had knee-jerk reactions and exited the fund last year out of panic or fear missed out. This highlights some important hallmarks of our investment approach at Hewins Financial — a long-term outlook and a rigorous, unbiased research process.
PIMCO Total Return, previously managed by Bill Gross, now has three co-CIOs at the helm: Scott Mather, CIO U.S. Core Strategies, Mark Kiesel, CIO Global Credit and Mihir Worah, CIO Real Return and Asset Allocation. So far this year, the fund’s non-core positioning in high yield, Treasury Inflation-Protected Securities (TIPS) and emerging debt have contributed to solid outperformance versus the bond benchmark and 95 percent of its peers.2
Does this mean that PIMCO is completely out of the woods and no longer bears watching? Of course not. As with any fund, research is necessarily ongoing. In this case, it will be important to look for continuity of firm leadership and fund management, and stabilization in fund flows, among other things.
So far, at least, the sky hasn’t fallen.
