Really, it’s not you….it’s me. No, really. Maybe we should see other fund managers.
If you needed more reason to at least consider jettisoning your PIMCO Total Return Fund they just gave you another today….a letter from the firm dated this morning tries to assure investors that everything is under control at the shop. (Thanks to podcast listener Gabriel for forwarding it!)
When do you know that things probably aren’t “under control”? When your fund management takes time away from managing money to write you a note which only says that things are “under control.”
The note reads, in part:
“We’d like to assure you that we will continue to manage PIMCO Total Return using the same time-tested investment process and philosophy that have guided its success from the beginning. At PIMCO, that means seeking returns and managing risk with a long-term view, and above all, putting our clients first. You also have our commitment that we will continually strive to maintain and improve fund performance. As Dan Ivascyn, our new Group CIO, says, that’s always been the mission at PIMCO and it is what we will continue to do.”
If you read the letter, what does it really say? We’re going to try to find you good returns.
Does that warrant a shareholder letter? Not hardly. ….but the fact that they needed a note at all is VERY noteworthy.
Some context: The only time my old firm Ameriprise (at the time it was called American Express Financial Advisors) ever sent out this type of letter was when assets or advisors were jumping ship. In fact, I was in Detroit when around 100 advisors left the firm on a single day….and believe me, there were letters going out AND phone calls to clients telling them all was well! We even held a “things are going great here” town hall meeting with food and lots of (forced) fun.
From having been on the inside, I’ll tell you….things were neither fun nor great at the firm during those days.
While letters like this PIMCO note are meant to quell fear, it’s just another in the line of reasons I think it’s probably a good time to rethink using the PIMCO Total Return fund at all. At the very least, follow Gabriel’s path of following as much of the news as possible and staying informed. He’s staying with the fund, but he’s intimately aware of the risks and rewards. Normally you shouldn’t follow your bond fund frequently. You should let management do their job. In this case, I’d do the opposite and know as much as possible.
There are plenty of fish in the bond mutual fund space, and none other that are currently massaging the fact that things aren’t the same at PIMCO as they were just a few short days ago.