Late Friday the world’s largest bond manager, PIMCO, announced the replacement for its founder and now former chief investment officer Bill Gross. Taking the reigns at the Newport Beach based firm is Daniel Ivascyn. The average retail investor may not know that name but inside “the biz” his success is common knowledge.
Ivascyn was awarded 2013’s “Fixed Income Fund Manager of the Year” by Morningstar and has been an integral part of PIMCO as we found out when we visited their headquarters and spoke with him last June. We first asked about his investment ideas this year.
He admitted this year was and will be a bigger challenge when it comes to finding value in the market. Still, he says, “an attractive feature is that we’re still going through a multi-year deleveraging process.” The benefactors of that process and hence the kinds of investments he and PIMCO like are mortgage securities and emerging markets.
“The emerging markets were, at least initially, negatively impacted by talk of Federal Reserve Tapering, he says. “Then some unique events like the election coming up in Brazil, some of the issues like a weakening in China and it’s impact on other emerging market nations have led to what we think are some mispricings in that segment of the market.”
During our visit we also asked him about the new structure at PIMCO that was put into place when former CEO and co-CIO Mohamed El-Erian left earlier in the year. Upon his departure the firm restructured leadership, naming several deputy CIO’s under Gross.
PIMCO’s new CEO, Douglas Hodge, said in a statement after Gross’ departure that Ivascyn’s move to the top and some other shuffling of executives “marks the completion of our portfolio management succession process. These appointments are a continuation of the structure that PIMCO established earlier in 2014.”
We spoke with Ivascyn about the original structural change during our visit.
“With this new deputy CIO structure, we’re very very focused on the reaffirmation of our ultimate commitment which are strong client risk adjusted returns. So all the deputy CIO’s have oversight responsibilities for a series of portfolios. We focus very closely on measuring their contribution to overall investment returns within their area of focus.”
Moreover, those deputy CIO’s are part of PIMCO’s investment committee process in which the big overarching “top down views” like “the new normal” and “the new neutral” are implemented.
Now Ivascyn is at the top of that pyramid, steering the company toward those big ideas and, at least according to PIMCO, the structure is now in place to keep them at the top.