Pacific Investment Management Co. LLC, Newport Beach, Calif., was granted a patent for the methodology behind the bond manager's Global Advantage Bond index family, the company announced.
The index uses GDP weighting to avoid the disadvantages of traditional indexes that are based solely on market capitalization that overweight countries with high levels of debt, said Olivia Albrecht, product manager at PIMCO. It is designed to capture the change in global bond markets of shifting economic weight to emerging markets from developed countries. The index, know as GLADI, also incorporates inflation-linked securities in addition to nominal bonds.
The patent was granted by the U.S. Patent and Trademark Office to Bill Gross, founder and co-chief investment officer, and Ramin Toloui, executive vice president and global co-head of emerging markets portfolio management. The patent was filed in November 2007, and the index was launched Feb. 5, 2009. Since inception through Nov. 30, the GLADI USD Unhedged index has returned an annualized 9.03% compared to 6.89% for the Barclays Capital Global Aggregate USD Unhedged index during the same time period.
“We think the Global Advantage Bond index enhances investors' ability to target improved risk-adjusted returns, and we are gratified that our work has been recognized with a U.S. patent,” Mr. Toloui said in a news release.
As of Nov. 30, PIMCO had $17.8 billion in assets under management benchmarked to GLADI strategies, Ms. Albrecht said.
Messrs. Gross and Toloui were not made available for interviews.
This article originally appeared in the December 10, 2012 print issue as, "PIMCO snags patent for bond index".