Pimco Says Runs on Mutual Fund Runs a Nonexistent Danger

Regulators debating deeming Pacific Investment Management Co. and other large fund companies systemically significant are hung up on a risk that isn’t there, according to the bond giant.

As the Financial Stability Board works on guidelines for regulating big asset managers, Newport Beach, California-based Pimco is disputing the idea that mutual funds could face a client “run” in times of market stress. The board “conflates investment risk with systemic risk,” and unlike with a bank, it’s understood that money put with an asset manager might not be returned in full, according to a May 29 letter to the board from Pimco Chief Executive Officer Douglas Hodge.