How Should PIMCO Fund Shareholders React to the Departure of Bill Gross?
“Bond king” Bill Gross is leaving PIMCO, a company he co-founded, to join Janus Capital Group (JNS). Our mutual fund guide shows Gross as the lead manager on eight PIMCO mutual funds. Our exchange-traded fund (ETF) guide shows Gross as the lead manager on one PIMCO ETF. The Closed-End Fund Association’s website shows Gross managing two close-end funds. It is possible that there are institutional funds that Gross manages as well. A list of funds managed by Gross that are readily available to individual investors is displayed below.
If you own shares in a PIMCO fund managed by Gross, the big question is what should you do now? In situations when a manager leaves, the best move can be to sit tight and monitor the situation. If the fund(s) still meets your criteria for buying it, then don’t make a kneejerk reaction. Rather, see who takes over the fund and how that manager (or group of managers) performs relative to their category peers. Though likely to be less outspoken, the new manager(s) may prove to be as talented as or even more talented than Gross. They could also be worse. Until actual results begin to appear, nobody knows with any certainty how the funds will perform.
I realize that the advice to sit and monitor the situation can seem tough to follow. If you are uncomfortable doing so, go through the data in our fund guides. Look at the long-term performance of comparable funds, paying attention not only to the recent top performers, but also to those funds that have been able to best their peers over several years without experiencing considerably higher levels of volatility in their year-by-year returns. When doing this, be aware that bond market conditions going forward are likely to be different than they have been over the last five or 10 years. Pay attention to manager tenure, since the returns of a past manager don’t tell you how the new manager will perform. Don’t forgot to review the expense ratios as well, since every dollar spent on fees is a dollar you will never see again.
PIMCO Mutual Funds Managed by Bill Gross:
- PIMCO Fundamental IndexPLUS Absolute Return (PIXDX)
- PIMCO StocksPLUS Absolute Return (PSTDX)
- PIMCO Small Cap StocksPLUS Absolute Return (PCKDX)
- PIMCO StocksPLUS Absolute Return Short Strategy D (PSSDX)
- PIMCO Low Duration (PLDDX)
- AMG Managers Total Return Bond (MBDFX)
- PIMCO Total Return (PTTDX)
- PIMCO Unconstrained Bond (PUBDX)
PIMCO ETFs Managed by Bill Gross:
- PIMCO Total Return ETF (BOND)
Closed-End Funds Managed by Bill Gross:
- PIMCO Corporate & Income Opportunity Fund (PTY)
- PIMCO High Income Fund (PHK)
The First Quarter 2014 issue of QMFU is now available on-line
Posted on May 16, 2014 | Quarterly Mutual Fund Update
What Was Down Is Now Up
Two of last year’s worst-performing categories ranked among the first quarter’s top performers. Whether it was a reversion to the mean or a temporary blip within a long-term downtrend remains to be seen, but shareholders of precious metals funds and government long-term bond funds likely welcomed the reprieve. The average precious metals sector fund gained 11.3% in the first quarter after falling by 30.8% last year. The average long-term government bond fund rebounded by 7.1% during the first three months of 2014 after falling 5.5% in 2013.
The Third Quarter 2013 issue of QMFU is now available on-line
Posted on October 21, 2013 | Quarterly Mutual Fund Update
Third Quarter Similar to the First
The third quarter bucked its reputation for being the three-month period with the worst market performance for stocks. Rather, gains were realized by stock funds of all stripes and colors, though the magnitude of the gains increased as market capitalization decreased.
The Second Quarter 2013 issue of QMFU is now available on-line
Posted on July 24, 2013 | Quarterly Mutual Fund Update
Bond Funds Fall on Fed Uncertainty
Uncertainty about U.S. monetary policy was a key theme during the second quarter. Yields on the benchmark 10-year Treasury note rose from 1.63% on May 2, 2013, to 2.48% on June 30, 2013, over concerns that the Federal Open Market Committee would begin to curtail its bond-buying program sooner than expected. This speculation steepened the yield curve, with long-term rates rising by a greater magnitude than short-term rates.
The First Quarter 2013 issue of QMFU is now available on-line
Posted on April 29, 2013 | Quarterly Mutual Fund Update
The First Quarter’s Bull Run
Investors in stock funds were singing The Cars’ famous tune, “Let the Good Times Roll,” last quarter. U.S stocks enjoyed their best start to a year since 1998. Several market benchmarks reached new record highs, including the Dow Jones industrial average and the S&P SmallCap 600 index. The widespread gains resulted in 10 domestic stock fund categories posting average first-quarter gains of 10% or more.
The Fourth Quarter 2012 issue of QMFU is now available on-line
Posted on January 30, 2013 | Quarterly Mutual Fund Update
A Modest End to a Good Year
Most mutual fund categories experienced modest gains in the fourth quarter, achieving average returns of 2.2% or less. Though the final quarter’s performance may have been unimpressive, the full-year data tells a different story. Approximately half of the categories tracked by this newsletter delivered an average return of 10% or better in 2012.
The Fourth Quarter 2012 issue of QMFU is now available on-line
Posted on January 15, 2013 | Quarterly Mutual Fund Update
Commentary: “A Modest End to a Good Year” — Most mutual fund categories experienced modest gains in the fourth quarter, achieving average returns of 2.2% or less.
The Third Quarter 2012 issue of QMFU is now available on-line
Posted on October 22, 2012 | Quarterly Mutual Fund Update
A Good Quarter for Fund Investors
If you held onto a mutual fund throughout the third quarter, it is likely that you made money. Almost every category we track had an average positive return last quarter. The sole exception was contra stock market mutual funds that bet against the stock market; they lost 8.1% on average, as would be expected for a period when the major indexes rose.
Stock funds mostly outperformed their bond counterparts. Two equity categories posted double-digit gains and a third stock fund category was just shy of a 10% gain. Many bond fund categories posted more modest returns. Four bond categories had returns of 1.0% or less—still positive, but not by much.
THE SECOND QUARTER 2012 ISSUE OF QMFU IS NOW AVAILABLE ON-LINE
Posted on July 24, 2012 | Quarterly Mutual Fund Update
Mutual fund investors are constantly warned against chasing short-term performance, and the dangers of doing so were exemplified in the second quarter. What worked very well in the first quarter, didn’t work well in the second quarter. Conversely, some of the first quarter’s worst-performing categories were the best-performing categories in the second quarter.
A renewed focus on the European sovereign crisis combined with worries of a global economic slowdown caused many investors to adopt a more defensive stance. Many investors sought safety in government bond funds and dividends in less economically sensitive utility stock funds.
THE First QUARTER 2012 ISSUE OF QMFU IS NOW AVAILABLE ON-LINE
Posted on April 25, 2012 | Quarterly Mutual Fund Update
Commentary: Rally Propels Tech and Financial Funds
The first-quarter rally in stock prices led to double-digit gains in most stock fund categories. Technology and financial/banking sectors were particular standouts, with both sectors realizing average gains of nearly 20%.
Most bond funds also posted positive returns last quarter, though the gains were considerably less. The best-performing bond fund category was convertible bond, which gained 7.9%.