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The People of Pimco Continue to Impress

The combination of people and process has made the firm resilient.

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Eric Jacobson: Morningstar recommends a number of funds run by Pimco. And the reasons are much deeper than their record of performance. The starting point is its people. It has been roughly five years since cofounder Bill Gross left the company. But the acrimony of his departure overshadowed the remarkable achievements he made in attracting and retaining world-class talent and establishing a culture that has endured and perpetuated itself. There have been high-profile departures in the past, but they've been relatively few. And there has almost always been a deep bench of talent ready to step up and excel in the place of those who left.

Our Analyst Rating framework draws heavily on Process, and the way Pimco runs money has been a cornerstone reason in support of our recommendation of its funds. It stretches from the way that Pimco's teams contribute to the research and management of funds, to the functioning of its investment committees, to the execution of its risk-management efforts. The firm is very well resourced across each of those areas. And while its funds have certainly had stumbles here and there, Pimco's avoidance of major blowups has been crucial to its success and to the confidence of so many investors.

It's a testament to that combination of people and process that the firm has been so resilient. Pimco enjoyed billions and billions of dollars of inflows following the financial crisis. And given Bill Gross' outsize reputation and celebrity, it was inevitable that many of those dollars would flee when he left. His departure was arguably the biggest money management story the industry had ever seen, though, and even though Pimco remained huge after the outflows, they would have been a massive challenge to any company. The firm didn't flinch, though, not only keeping staff turnover low but continuing to hire and strengthen its team. And Pimco managed to keep performance competitive or better in most cases despite the outflows.

As of today, Morningstar has Analyst Ratings on 32 funds, which covers a large majority of its fund assets, and of which 23 earn recommendations in the form of a medal. And we also offer a quantitative version of our Analyst Ratings on 54 other funds, 46 of which carry those quantitatively assigned medals as well. Some of our favorites still include Pimco Total Return, run by three of the firm's most notable managers, as well as Pimco Income, which is comanaged by Dan Ivascyn, who effectively replaced Gross as the captain of Pimco's investments ship. We also have analyst-assigned medals on Pimco Short Term and Pimco Investment Grade Credit, both of which are run by managers who have in the past won Morningstar Manager of the Year awards.

Eric Jacobson has a position in the following securities mentioned above: PTTAX. Find out about Morningstar’s editorial policies.