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By Sumit Desai, CFA | 11-18-2014 10:00 AM

PIMCO's Kiesel: Management Change, but Fund Stays the Same

Bill Gross' departure and the subsequent outflows have not changed the management process of PIMCO Total Return, says PIMCO's Mark Kiesel.

Sumit Desai: Hi, I'm Sumit Desai, fixed-income analyst at Morningstar's manager research group. Joining me today is Mark Kiesel. Mark is chief investment officer of global credit and head of global credit portfolio management for PIMCO. He's the lead portfolio manager for PIMCO Investment-Grade Corporate Bond Fund (PBDAX) and the Long-Term Credit Fund (PLCPX) and a co-portfolio manager in the PIMCO Total Return Fund (PTRRX). Mark, thanks for joining me today.

Mark Kiesel: Thank you.

Desai: So, Mark, it's obviously been quite a roller coaster for PIMCO, its employees, and its investors following the announcement of Bill Gross leaving the firm. Can you talk a little bit, briefly, about how morale is within the company and how the overall firm has been managing this transition phase?

Kiesel: Sure. So, morale is very good. As you know, PIMCO has 2,400 employees in 13 offices in 12 countries all over the world. And basically, we have a team of 240 portfolio managers and 61 analysts. We have a new management structure in place led by Dan Ivascyn. We have six CIOs who are leading these groups, and the company is actually doing quite well in terms of handling liquidity and generating performance. So overall, even though we're sad to see Bill leave, the depth and breadth of PIMCO is significant, and we are quite confident in our future.

Desai: How have outflows changed the way the portfolios are managed?

Kiesel: There have really been no changes in how we've been managing the fund. We were actually very fortunate in that in September when we had to handle some of these outflows, we had significant cash. That portfolio, Total Return fund, as you know, is a third Treasuries, a third mortgages, and a third corporates. We also were sitting on a significant amount of cash, because in the prior spring and summer, we ended up raising a lot of cash when spreads had tightened. So, these outflows did happen, a lot of it happened in the first five or six days, but then they've subsequently tapered off. We've been able to rebalance the fund, and the overall portfolio structure has actually been able to be maintained with performance being decent. So, we're quite happy with how we've been able to handle some of the outflows.

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