Bill Gross jabs what he sees as PIMCO's potential doomsday strategy of using derivatives to boost liquidity
The founder of the Newport Beach bond giant says his former firm's supposed practice is just another form of leverage that would increase velocity of the unravelling process in the event of a run on assets
Gross has been using leverage in PIMCO Total Return practically from the beginning of the fund. He insisted repeatedly, as did representatives at PIMCO, that the derivatives they were using to wind up with a fund that equaled up to 160% of assets were in no way leverage, but any way you look at it, if a fund is investing a lot more money than it has in investor accounts, that is leverage!
I ran all the numbers on several occasions and it was pretty clear from the interest rates on the bond holdings there was no way that PTTRX could pay out the commissions and B/D “pay to play” fees, charge its internal expenses, and still produce the income it was generating unless it was well and truly leveraged to the hilt.
I find it quite interesting to read Mr. Gross stating that PTTRX and all its other identities use leverage after his adamant denials while he was there. If you take a look at the portfolio today, it is essentially the same mix in terms of types of securities as it was when he was at the helm.
Vanguard Group shows up as 'alpha' disciple with two new fixed-income fund launches as it surpasses PIMCO's $2 trillion with ex-Goldman Sachs partner now calling the shots
The $8 trillion Malvern, Pa. manager owns beta investing, but RIAs are demanding higher income -- hence market timing and cherry picking -- from their fixed-income allocation.
August 10, 2021 at 11:46 PM
Oisín's Bits: Betterment now a robo roll-up with Canadian IPO as catalyst • Insurers risk regulation for COVID-19 coverage delays • Vanguard shifts Asia focus to China's vast mom-pop retail market
Betterment rolls up a robo • The CFA warns insurers over COVID-19 life polices • Vanguard names Chinese fund head to pursue $6 trillion market.
March 5, 2021 at 1:16 AM
Karin Risi, who built $170-billion Vanguard Personal Advisor Services, takes new role and Matt Benchener is taking her spot as head of US retail for the $6.3 trillion manager
Risi now heads planning and still directly reports to CEO Tim Buckley and her 34 year-old understudy, Benchener gets her job at year's end.