The pace of asset growth Pimco Income has seen recently would be problematic for many funds (having grown too fast is widely regarded as a reason for the turn in performance of the once-prized Gars fund), but Moukarzel doesn’t see its large size as an issue for Pimco Income.
“The investment universe of the fund is trillions of dollars in size, so the fund can still grow a lot larger without constraints,” he says.
Unsurprisingly, fund manager Ivascyn doesn’t see a size problem either. “Not being attached to a benchmark and having a global opportunity set, and very flexible guidelines, give us tremendous advantages in terms of handling the scale. 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 point,” he says.
What about the key-man risk? Pimco has a history of that. After the shock departure of its star manager Bill Gross in 2014, Pimco saw large outflows and performance of many of its funds suffered for a time. Is a repeat of this to be feared?
“Ivascyn is very important within Pimco, but it’s really not a one-man show,” says Van de Ven, while Moukarzel praises the fund’s “team-based approach” and Pimco’s “vast resources and unique expertise” in fixed income.
The main challenge for Pimco Income in the future will simply be to continue to find that income in an environment of low, but rising rates, and with diminishing help of an auxiliary engine in the form of US mortgages.
