As institutional investors sought the security of domestic fixed-income strategies in 2009, money manager PIMCO was a master at gaining large new chunks of inflows from worried clients.
While PIMCO appears to be the biggest winner by far, according to data estimates from eVestment Alliance, Marietta, Ga., other firms like BlackRock Inc., Eaton Vance Investment Managers, State Street Global Advisors and The Vanguard Group Inc. also enjoyed net inflows in particular strategies last year.
The data from eVestment Alliance show that most asset classes sustained outflows in 2009. Only four strategies bucked the trend: U.S. fixed income, global fixed income, emerging markets equity and emerging markets fixed income.
U.S. fixed income dominated inflows, with more than half of the U.S. fixed-income managers in the study showing positive flows for the year. But that category was dominated by the dramatic amount of money flowing into just one firm: Newport Beach, Calif.-based Pacific Investment Management Co., according to eVestment estimates.
PIMCO captured more than $160 billion in new inflows in U.S. fixed income last year, more than four times the amount of money given to any other manager for their strategy, according to eVestment Alliance estimates.
“If an institutional investor did a search for a bond manager in 2009, PIMCO was going to be the likely winner,'' said Steven Center, a senior research associate with Wurts & Associates Inc. in Seattle.
Mr. Center said PIMCO's superior investment returns, remaining in the black even during the height of the economic turmoil in 2008, left a strong impression on plan sponsors looking to change managers in the hope of better results.
Data from Morningstar Inc. show PIMCO's Total Return Fund — the world's largest bond fund — posted investment gains of 4.8% in 2008 and 13.8% in 2009.
While other bond managers were able to garner good results last year, 2008 was a different story.
PIMCO's 2008 gain happened in the same year that most bond managers were losing 15% to 20%, said Eric Jacobson, director of fixed income research at Morningstar Inc. in Chicago.
“A number of very good firms got varying degrees of black eyes during the financial crisis,” he said. “PIMCO was one of a handful of firms that maintained consistent performance.''
Mr. Jacobson said PIMCO Managing Director Bill Gross was one of the few fixed-income investment managers who stayed clear of non-agency backed mortgage securities, avoiding the consequences of the real estate collapse. “PIMCO was one of a handful of firms where senior leadership saw a problem in the housing crisis,” he said. “They were probably better prepared than anyone in the world.''
Jon Salstrom, head of fixed-income research at Callan Associates, San Francisco, said companies like PIMCO that demonstrated the ability to control volatility and stuck to a disciplined investment process were winners in the financial crisis.
“Those firms built a trust and following in the market place,” he said.
“There are always a number of different ways to look at asset flow data, but to see well-known names at the top of the study — large, global asset managers that provided clients with a strong sense of sustainability and reach in one of the most dramatic investment years we've experienced — is not surprising,” said Jim Minnick, principal at eVestment.
“Yet, aside from the 'big getting bigger' phenomena we witnessed, you had a few other notable trends emerge from the study,” he said. “First, you had sizable flows out of almost every broad equity category into almost every broad fixed-income category, with seemingly relatively little new money flowing into the mix overall. Second, you also had a substantial amount of manager churn within categories, with a number of firms losing assets that then flowed to a handful of their stronger peers. Given these overriding trends, we felt an interesting subtext was found with firms that did well despite the headwinds going against them.”