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CEF Specialist

PIMCO CEFs Post-Gross

Checking in on PIMCO’s CEFs a month after Gross’ sudden departure.

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The sudden departure of Bill Gross from PIMCO on Sept. 26, 2014, sent shock waves through the investment world. Gross' management of five PIMCO closed-end funds, or CEFs, wasn't top of mind for most pundits, but the exodus caused a bit of excitement among CEF investors. In the days following Gross' departure, we published an initial piece focusing on discount and premium activity and what we had learned of the funds' new skippers. We revisit those areas below now that most of the dust has settled.

Because several PIMCO CEFs had historically traded at relatively high premiums prior to Gross' departure, many CEF watchers predicted extreme share price declines, particularly for the five CEFs that Gross managed. It's also widely known that Gross owned a significant amount of shares of many of PIMCO's CEFs. Some wondered whether Gross would dump all of his shares, putting further downward pressure on share prices and premiums. While we won't know if Gross ultimately does sell his shares—and based on research we've conducted since then, we have reason to believe he may stick with them if PIMCO doesn't radically alter its strategy or management—we've been tracking the premium and discount movement of PIMCO CEFs and their respective categories since his departure. It's been a bumpy ride for investors in those funds, but that volatility created opportunities for interested investors to scoop up shares at cheap valuations. Here, we check in again on the five funds for which Gross served as lead manager, all of which land in the Morningstar Category of multisector bond CEFs:

Cara Esser does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.