Pimco’s Ivascyn Conquers Europe Too as Global Fund Attracts CashBy and
Dublin version of flagship now Continent’s largest mutual fund
Manager’s strong returns sparking new round of growth at firm
Investors around the world can’t get enough of Pimco’s Daniel Ivascyn.
Pimco GIS Income Fund, the global version of Ivascyn’s Pimco Income Fund, attracted $31.2 billion in net deposits this year through August, Bloomberg estimates show. The Dublin-domiciled GIS Income doubled in size and became the biggest mutual fund in Europe after ranking 15th as of Dec. 31, according to data from Morningstar Inc.
Ivascyn’s status as a bond star, built on a decade of strong performance at the flagship, is helping to reignite growth for Pimco after the 2014 exit of co-founder Bill Gross fueled redemptions. Allianz SE, Pimco’s Munich-based parent, said the U.S. investment arm received a record $62 billion in net third-party inflows in the second quarter. GIS Income, which is sold in Europe, Asia, Latin America and the Middle East, is winning both institutional and retail clients.
European and Asian investors gravitate to strategies used by the income fund that focus on delivering an absolute return and aren’t tied to a benchmark, Ivascyn said in an interview.
“Some of that may be a regional preference and related to the very low return rate environment,” he said.
Performance is proving to be a cash magnet for both the U.S. and global vehicles. Only 11 bond mutual funds in the world have more than $50 billion in total assets, and the two Pimco funds combined gathered more than that in the past eight months. The U.S. fund added $20.2 billion, Bloomberg estimates.
Pimco GIS Income has become the best-selling fund ever in Europe, said Chris Chancellor, a partner with MackayWilliams LLP, a London-based mutual fund market research firm.
“The Pimco brand in bonds remains very strong,” Chancellor said. “And no doubt a decent set of returns has also helped.”
Still, there is a danger that rapid growth could become too much of a good thing for Pimco GIS Income, said Mara Dobrescu, a Morningstar analyst in London.
“We are keeping a close eye on those inflows,” Dobrescu said. “Over time, if the fund gets too big it could be harder for them to replicate their success.”
Ivascyn doesn’t see capacity posing a problem.
“If we ever got concerned with the size of the fund, we’d close the fund, but we are a long, long way from that,” he said.
Ivascyn, 48, Pimco’s group chief investment officer, and co-manager Alfred Murata run the U.S. and global variations using the same approach. They buy a mix of higher-yielding assets that they expect to do well when the economy is strong and better-quality assets that can thrive under weaker conditions.
Both funds own a blend of mortgage-backed securities, government bonds, high-yield and investment-grade debt, although the allocations differ. The global fund has a heavier current weighting in junk bonds and less in mortgages, Pimco’s data show.
The $54.5 billion GIS Income Fund has posted a similar performance to the $95.9 billion Pimco Income Fund, which is the industry’s largest actively managed bond fund. In the three years through Sept. 8, Pimco Income gained 5.8 percent annually, better than 99 percent of peers, while GIS Income averaged returns of 5.5 percent, topping 94 percent of rivals.
In addition to peer-beating performance, Ivascyn credited the global fund’s growth to Pimco’s overseas sales efforts and the arrival last year of Chief Executive Officer Emmanuel “Manny” Roman, who came to Pimco from London-based hedge fund firm Man Group Plc.
“This focus predates Manny’s arrival but what Manny has added and amplified is an innate understanding of the building of a global business,” he said.