As you may have heard or read in the news today, Bill Gross, the most famous bond fund manager in the world, is leaving PIMCO after 43 years. Bill Gross and PIMCO have played a role in virtually all of our clients’ portfolios for the past 24 years, and we want to allay any concerns you may have at this time, as well as let you know what we’re planning to do moving forward.
According to Morningstar, Gross’ departure “will have definite repercussions at PIMCO, but the depth of the firm’s research capabilities means investors can take some time to assess how Gross’ exit will impact the firm before making an investment decision.”
We have tremendous respect for both Bill Gross and PIMCO. PIMCO manages several mutual funds, mostly focused on bonds, that are among those we use for our clients. We will continue to monitor developments at the firm, and will conduct a thorough analysis of our exposure managed by them. We have no plans at this time to make changes with our PIMCO positions.
While you may hear talk of some of PIMCO’s mutual funds losing value today, keep in mind that the affected funds are not among the funds we have you invested in. (The affected funds are closed-end funds, which are much more price sensitive to sudden, large cash flows such as those that occurred today.) In fact, the primary PIMCO fund we use, PIMCO Total Return, is actually up today.
Also, we can take comfort in the fact that investments in mutual funds are 100% backed by the investments in the funds’ portfolios, and are held separately from the assets of the mutual fund sponsor (in this case, PIMCO). Put another way, PIMCO has no access to mutual fund assets to pay its own bills — the assets are held in trust by an outside entity, usually the trust division of a bank.
The bottom line is this: there is no reason for you to panic or worry about today’s developments at PIMCO. We will continue to follow developments there, and may make changes to our recommended fund lineup. But for now, your money is still invested in the same portfolio(s) it was in yesterday, and PIMCO as a company still has a remarkably large and talented group of managers and analysts working to protect and grow the funds they manage. We will, of course, keep you informed of further developments.
As always, if you have further questions, feel free to contact us.
All our best,
Peter and the Team