PIMCO: Three Key Secrets To Success in Asset Management

Success as an Asset Manager requires having very specific strategies and skills at your disposal that you apply in the field. It is also important to learn from the companies and honored managers that have come before as well. Both their failures and successes can be the most accurate guides on the path towards success in the industry. Morningstar has named its leading fixed-income managers over 2013 and has explored the keys to their success. Both Dan Ivascyn, the PIMCO Deputy CIO, and Alfred Murata, the company’s Managing Director, have taken home the honors.

Company ValuesPIMCO has been successful in asset management due to some core values that have guided their business forward. Flexibility, the protection of client capital, and taking advantage of global opportunities are all part of the company’s cornerstones. When exercising flexibility with a portfolio, the central goal is to cultivate substantial income that is not anchored to benchmarks. Instead, preservation and appreciation is the central focus. Looking at the global market also allows PIMCO to approach valuations differently, taking a global perspective with asset tiers in mind. Finally, protecting clients entails making choices that allow investments to be resilient. This strategy includes putting assets into positions where appreciation is possible even during economic downturn.

All the Eggs in Two Baskets

Dan Ivascyn has been an integral part of the company’s success thanks to his ability to handle high-conviction approaches to asset management. Part of the focus must be defensive when making these kinds of decisions. Portfolios are divided into two, individual components that have different roles. One is geared towards higher-yielding investments while the other focuses on quality that can perform well when economic growth is low. According to Ivascyn, management of this kind is aimed at achieving “objectives of income generation and capital preservation.”

Clients Interest First

It can often be difficult for companies to give clients distributions that are consistent and lucrative while still seeking active returns on investments. However, PIMCO has developed income strategies that are solid on all of these fronts. According to Alfred Murata, “generating income and total return are mutually exclusive goals.” Global opportunities are integral in this strategy. PIMCO has also illustrated that opportunity at this level requires having the foresight to reduce distribution in order to protect the interests of clients rather than simply over reaching for higher financial yields.

Planning For Every Contingency

There are also very specific approaches that must be taken for the components of client portfolios that are geared towards high yields. The United States mortgage-backed securities that are not associated with agencies have been a great source of value. These bonds have provided opportunities for purchase at deep discounts initially. This dimension of the securities gives investors breathing room when economic conditions are completely positive. When conditions rise above analyst expectations, the investment yields high returns, allowing clients to be satisfied in both scenarios.

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