Pacific Investment Management Co. PIMCO, the world’s largest bond-fund manager, announced today that it wants to expand its alternative investment business.
Douglas Hodge, the firms Managing Director, told the WSJ that PIMCO are planning to expand their alternative-investments business in the coming months and could potentially launch new funds invested in assets such as distressed debt in Europe.
The embracing of such risky markets is a complete sea change for PIMCO, a firm which under the stewardship of Bill Gross, has become synonymous for safety and security over the last thirty years.
So how will investors react to the news? Well Barry Ritholtz gives us a clue: Barry said in a post on his popular blog The Big Picture.
“The loser in this are the institutional investors who have come to rely on the “bond king” for safety and security. The winner? The new bond king, Jeff Gundlach’s and his firm Doubleline. We swapped some holdings form PIMCO to Doubleline last year; I suspect that we will eventually move the rest in that direction.”
So there you have it. The bond king is dead, long live the bond king!
Todays Other Top Stories
Income Investing: – Gundlach likes mortgage REITs now. – Speaking on CNBC, one time mortgage REIT hater Jeff Gundlach of DoubleLine Capital was singing the praises of mortgage real-estate investment trusts, along with closed-end funds, now that they’re trading at significant discounts, particularly following the months-long rout for mREITs.
Bernardi Securities: – Outperforming the madness of municipal bond fund herds. – As we have learned over the last decade, only hindsight is 20/20 when it comes to pinpointing irrational valuations. The avoidance of herd-like situations is precisely why separately managed municipal bond portfolios offer an advantage to bond mutual funds or ETFs.
Learn Bonds: The new “new normal” and what it means for investors. – David Waring looks at the “new normal” what is it and how should you position your portfolio for it?
IndexUniverse: – The ‘new normal,’ and its consequential morphing. – In four quick years, the concept of the “new normal” has gone from being viewed as unlikely by most analysts and policymakers to becoming consensus. The popular application of the phrase now extends well beyond its original conceptualization that simply encompassed economic and financial prospects. It has also been used to describe medical procedures, unusual weather patterns and geopolitical shifts. It even gave rise to a television series.
Reuters: – P2P lending pulls in big investors – should you bite? – Less than a decade ago, peer-to-peer lending came to the United States as an upstart enterprise – a service that would in a very personal way link would-be borrowers with individual lenders and bypass the banking industry.
Anthony Valeri – LPL Financial: – Just how bad was the bond market sell-off? – A look at how the current bond market sell-off compared to others of the past 20-years.
Pragmatic Capitalism: – Has 2013 really been a bond market “slaughter”? – It seems like everyone’s talking about the great bond market “slaughter” of 2013. Yeah, it’s been brutal, but not really.
Fox Business: – 4 Trusty tips when investing in REITs. – Over the past 10 years, real estate investment trusts, or REITs, have been stock market darlings, outperforming Standard & Poor’s 500 index.
ETF Trends: – TIPS ETFs hit by ‘perfect storm’ of tame inflation, rising rates. – ETFs following inflation-indexed bonds have run into a buzzsaw this year due to low inflation expectations combined with a move higher in U.S. interest rates.
Reuters: – What happened to Chicago’s bonds? – Last week, on August 23rd, an unlimited tax general obligation bond for Chicago had a disastrous performance. What is going on?
Reuters: – Fitch cuts Virgin Islands Public Finance Authority bonds. – Fitch Ratings on Thursday cut its rating on senior lien revenue bonds (Virgin Islands matching fund loan note) issued by the Virgin Islands Public Finance Authority to BBB from BBB-plus, affecting $901.1 million of debt.
Bloomberg: – Biggest Michigan market test coming Sept. 10 from Oakland County. – Michigan’s Oakland County, which borders Detroit to the north along 8 Mile Road, is set to sell $350 million of debt next month in the biggest offer from the state since June, before the city’s record bankruptcy.
Income Investing: – Munis yielding as much as comparable corporates. – The silver lining of any selloff is that it usually creates some buying opportunities. Such is the case in the muni market, where if you can overlook the losses your muni funds have experienced lately you can find some pretty good bargains out there now. Munis have been hit by the same Federal Reserve tapering fears and rise in interest rates that have hurt all sorts of bond funds, but the losses in the muni market have been exacerbated by the recent bankruptcy filing of Detroit and other negative headlines.
WSJ: – Detroit’s woes add to angst over municipal debt. – Municipal-bond prices have fallen further than other debt amid rising U.S. interest rates this summer, highlighting investor jitters spurred by Detroit’s record-setting bankruptcy filing.
ETF Trends: – A Muni bond ETF that sidesteps default worries. – Investors who are uncertain about the outlook for general obligation bonds in the wake of Detroit’s bankruptcy filing can consider this muni ETF. Detroit has brought default risk into focus for general obligation.
Preliminary YTD numbers show that muni bond volume has fallen 13% to $224.8B through August against the same span in 2012.
— James Ramage (@JamesRamage_WSJ) August 29, 2013
media reporting Detroit looking to borrow 350 million bucks – keep your hands in your pockets folks….chapter 9 has its downside governor..
— Michael Pietronico (@MillerTabak) August 29, 2013
While market is difficult-#PR, balances on CA, fund outflows-some positive areas: retail active in certain sectors & x-over buyers involved
— Muni Market Advisors (@Muni_Mkt_Advis) August 29, 2013