By Tom Bradley
Bill Gross doesn’t need my help. The PIMCO Founder and Co-Chief Investment Officer is the undisputed bond king. He oversees a $2 trillion company and has been right many more times than he’s been wrong.
But an article in today’s Financial Times on the PIMCO Total Return Bond Fund is an example of where short-term returns and the need for an eye-catching headline get in the way of sound analysis. The article goes on at great length about how the fund was down last year (-1.9% after fees) and lagged behind a majority of its competitors. The headline (‘PIMCO’s Bill Gross suffers torrid 2013’) and tone implies that Mr. Gross and his team are really down on their luck.
The article only mentions in passing that the Total Return Fund was slightly ahead of the bond market index (-2%) last year and more than doubled it the year before (10.4% vs. 4.2%). It fails to mention altogether that the fund has an excellent long-term track record.
Unbelievably, the article compares the Total Return Fund’s 2013 performance to some U.S. equity funds, which were on rocket rides last year.
This piece is particularly poorly done (don’t worry, Mr. Gross can take it), but it’s a reminder to all investors that no matter what the source (the revered FT, Wall Street Journal or our own Globe and Mail), a short-term oriented, haphazard report on a fund or manager must be ignored, no matter how prominent the headline. These types of articles are irrelevant at best and may lead to poor investment decisions at worst.
As for you Bill, try to do better this year will yah.
Disclosure: PIMCO manages a portion of the Vancouver Foundation portfolio, for which I am chair of the Investment Committee. In face of that, I have on a number of occasions taken issue with things Bill Gross or PIMCO has said.