Despite the Bill Gross’ sudden departure from PIMCO, the exchange traded fund version of the company’s flagship Total Return Fund is monitored by a seasoned group of managers and could still offer decent risk-adjusted returns.
Bill Gross and Mohamed El-Erian have exited PIMCO’s Investment Committee, the body that determines the broad risk exposure of the company’s fixed-income strategies, but Dan Ivascyn, the new group chief investment officer, along with Mark Kiesel, Mihir Worah and Scott Mather, will maintain the firm’s committee-driven investment process, writes Morningstar strategist Samuel Lee. [BOND Bleeds, but Other PIMCO ETF See Modest Inflows]
While the PIMCO Total Return Institutional Share (PTTRX) has been downgraded to a bronze rating by Morningstar, Lee argues that the fund will continue to outperform its category peers on a risk-adjusted basis over a full market cycle.
“Morningstar also maintains a positive view on the quality of the fund’s new portfolio managers and its existing investing process, which is unlikely to change significantly,” Lee said.
The average retail investor can gain exposure to PIMCO’s Total Return Fund through its ETF adaptation, the PIMCO Total Return ETF (NYSEArca: BOND).
“BOND remains a fine core bond fund,” Lee added.