(PUB) Investing 2015

310 / 772

20
We are maintaining our Neutral Parent rating on
PIMCO, though we see positive signs. Here’s a
rundown of where the firm stands.
Fears that analysts and managers would flee PIMCO
following Bill Gross’ September 2014 departure have
not materialized. The departures of Saumil Parikh
and central-bank watcher Paul McCulley are notable,
but otherwise, personnel turnover has been close to
historic levels. The return of several high-level invest-
ment staff is also a positive signal that the firm’s
culture has improved.
Outflows, While Lessening, Remain a Concern
Redemptions from PIMCO Total Return PTTRX and
other hard-hit strategies, including PIMCO Uncon-
strained Bond PUBDX, PIMCO Low Duration
PLDDX, PIMCO All Asset All Authority PAUDX ,
and PIMCO High Yield PHYDX, have eclipsed $250
billion through April 2015. Outflows from PIMCO
Total Return have finally started to slow, dropping to
approximately $2.7 billion in May 2015, and there
have been several strategies enjoying sizable inflows,
including PIMCO Income PONDX .
PIMCO Fund Ratings Recap
Our highest-rated PIMCO funds are those for which
management has remained consistent since Gross’
departure, including PIMCO Income, PIMCO Invest-
ment Grade Corporate Bond PIGIX , and Rob
Arnott’s PIMCO All Asset PASDX and PIMCO All
Asset All Authority. Here are some we’ve revisited:
PIMCO Total Return PTTRX and PIMCO
Low Duration PLDDX
While it will take time to see how the three new
portfolio managers on PIMCO Total Return settle into
their new roles, and flows remain a concern, the
´ratings on these two funds reflect our con-
viction in the strength of PIMCO’s investment team.
Scott Mather, who previously headed up the fund’s
global portfolio management group, has taken the
lead at both funds, and heavy outflows do not appear
to have significantly affected their performance.
PIMCO Unconstrained Bond PUBDX
When Marc Seidner took over in January 2015, he
became the fourth manager to run this fund in less
than 18 months. Seidner has an impressive resume
and is backed by an experienced team. However,
the number of changes to the fund’s investment team
and questions regarding the fund’s implementation
of an unconstrained mandate support its Morningstar
Analyst Rating ofˇ.
Global, Foreign, and Emerging-Markets
Bond Funds
The ´-rated global- and foreign-bond funds
run by Andrew Balls have experienced little turnover
during the past several years, and the additions of
comanagers Sachin Gupta and Lorenzo Pagani
should help to alleviate Balls’ workload. The funds’
emerging-markets exposure bears monitoring,
with those stakes climbing as high as 30%–40%
of assets as recently as late 2014.
We downgraded PIMCO Emerging Markets Bond
PEBIX and PIMCO Emerging Local Bond PELBX
to ´from Silver. The team under Michael
Gomez has seen several departures in recent years,
and the team has courted volatility through large
country bets (Brazil, Russia, and Mexico) that on
balance haven’t played out well lately.
Real Return Funds and Global Multi-Asset
The picture for the real-return and multiasset teams
under Mihir Worah is brighter than expected. Jeremie
Banet returned to the fold shortly after Gross left;
he, Nic Johnson, and Greg Sharenow have been
named comanagers on PIMCO Real Return PRRDX,
PIMCO Commodity Real Return PCRIX, and
PIMCO Commodities PLUS PCLDX, respectively.
PIMCO Global Multi-Asset PGMDX, too, is on
more solid ground, following the early-2015 arrival
of emerging-markets and equities specialist
Geraldine Sundstrom. K
Contact Sarah Bush at
PIMCO in Better Shape Than Expected
Income Strategist | Sarah Bush