Proving that even a so-called “Bond King” isn’t immune to performance stumbles, the Financial Times reports that Pimco’s Bill Gross “struggles to turn around a year of uncharacteristic poor performance.” Gross is now ranked behind 92% of his peers, in a year when less than 10% of active bond managers have beaten their benchmark.
In a letter to investors, Gross said this year has been a “stinker” and that “PIMCOs centerfielder has lost a few fly balls in the sun.” PIMCO’s Total Return Fund is now up only 2% for the year so far against a gain of 7% for the Barclays Capital US aggregate bond index.
Desperate times call for desperate measures. The solution? Pimco is going Latin! reports the same Financial Times. The US fund manager is opening an office in Rio de Janeiro next month to service a growing list of Brazilian clients.
A few weeks ago we posted Pimco’s “brilliant” idea of investing in local Brazilian bonds, right in the middle of a currency volatility storm. But now they got even more serious, says a company executive.
“These economies will make further gains. In the context of the rest of history, the last 100 years [of western dominance] are extraordinarily untypical. The per capita incomes in emerging markets are still not even close to developed market per capita incomes. So the EMs can literally get 10 times bigger.” “For more than 10 years we have been thinking about EMs and forecasting EM economic performance.”(wow… aren’t they a little late to the game?)
For one thing, they chose a nice beach (Copacabana) to chill after a rough year …