Pimco is as strong as it’s ever been, meriting an increase in its Parent rating to High from Above Average.
Pimco has long been a fixed-income juggernaut. It has one of the asset management industry’s largest rosters of managers and analysts, and they’re not for show. The firm employs some of the best in the business, including five portfolio managers who have won Morningstar Rising Talent or Manager of the Year awards. Pimco has an intense working culture, a competitive drive to deliver strong results, and has historically paid handsomely, if nothing else, to stay in the game when compensation surges in other corners of finance. The upshot of all this has been a broad and well-conceived lineup of fund offerings, most of which have impressive long-term records.
Nobody’s perfect, Pimco included. Asset growth at Pimco Income has been relentless, and there’s always a worry that a stellar fund could outgrow opportunities in its chosen markets. Meanwhile, investors in Europe, in particular, haven’t enjoyed economies of scale in pricing befitting Pimco’s massive asset base. Still, Pimco has proved it can succeed with gigantic funds, and Pimco Income operates within an expansive investment universe. The firm argues its pricing is fair, given its success in serving investors, and its results make that a hard argument to crack, but there’s no easier way to lift returns than to trim expenses.
CIO and Pimco veteran Dan Ivascyn and CEO Manny Roman took their roles in 2014 and 2016, respectively, Ivascyn after Bill Gross’s acrimonious 2014 departure and Roman after CEO Doug Hodge retired. They inherited and built on organizational strengths. An experienced and successful portfolio manager, Ivascyn has nurtured and enhanced the firm’s uncompromising investment culture. He and Roman have grown the firm’s pool of investment professionals and its army of financial engineers, quant specialists, and technology experts to sustain outperformance and keep risk in check. The analytical tools of some competitors are better known, but the depth and breadth of Pimco’s are at or near the top of the heap.
Changes in leadership always bring uncertainty, but it has become clear that Ivascyn and Roman have exceeded expectations. There may be a few others in Pimco’s league, but very few.
Note: This share class' Parent Pillar rating is analyst-driven, as its Branding Name, PIMCO (Branding Name ID: BN000009NK), is covered by Morningstar Manager Research.
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