NEW YORK (Reuters) - Dan Ivascyn, the group chief investment officer at Pacific Investment Management Co (Pimco), eschews making big, splashy investment or market calls, unlike his legendary predecessor, Bill Gross.
“It is never only one person,” Ivascyn said in an interview, about investment ideas and fresh strategies. “Even those who use ‘I’ a lot have very good teams that do the heavy-lifting.”
Pimco’s emphasis on generating strong long-term risk-adjusted returns has been the key factor behind the success of the Pimco Income Fund (PIMIX), which on Tuesday captured the 2018 U.S. Thomson Reuters Lipper Fund Award in the multi-sector income category over a 10-year period.
Pimco Income, overseen by Ivascyn and managing director and portfolio manager Alfred Murata, is No. 1 in its category with annualised returns of 9.14 percent over the last 10 years ended Feb. 26. Over the same period annualised, the Pimco Income fund has surpassed the benchmark Bloomberg Barclays U.S. Aggregate Bond index by 3.74 percentage points.
Todd Rosenbluth, director of mutual fund research at New York-based CFRA Research, said: “The fund has less interest-rate sensitivity than peers and the (Barclays) Agg, while offering more exposure to strong performing high-yield bonds.” He added that the Pimco Income fund had “balanced risk-and-reward” better than its peers.
Pimco Income, whose assets have grown to the current $110 billion from $70 billion at the end of 2016, has become the biggest U.S. actively managed bond fund and is considered Pimco’s new flagship fund by investors and Wall Street analysts.
“We have a solid team and constantly focus on enhancing our process,” Ivascyn said.
The Pimco Income fund’s increase in fees at the start of the fourth quarter last year did not deter investors. The fund raised its fees by 5 cents per $100 on Oct. 2 for most share classes, bringing expenses for the institutional-class shares to 50 cents per $100.
“The fund benefited in 2017 from its exposure to mortgage bonds as well as investment-grade and high-yield corporate bonds,” Rosenbluth said.
Lipper also recognised Pimco’s Short-Term, Foreign Bond and StockPlus funds for their 10-year records in the respective ultra-short obligation, international income and equity categories.
Pimco, a unit of Germany’s Allianz SE (ALVG.DE), has seen its assets under management recover dramatically since Gross’ abrupt exit in September 2014. As of December 2017, Pimco had $1.75 trillion under management, up from $1.52 trillion as of June 30, 2015 - but still down from $1.92 trillion at the beginning of 2014.
Ivascyn said Newport Beach, California-based Pimco still makes big, bold economic and investment calls but there is no burning desire to publicize them as Gross did.
In January, Gross, who is the manager of the Janus Henderson Global Unconstrained Bond fund, said bonds have entered a “mild bear market.”
Gross said the bear market will not be the extreme inverse of the 30-year bull market, where interest rates declined from 15 percent to below 2 percent.
“These concepts lead to great sound bites but have very little impact on actually making money for clients,” Ivascyn said.
Reporting by Jennifer Ablan; Editing by Lauren Young and Tom Brown