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Bill Gross is a smart man, not just in the way he goes about managing funds, but also in the way he handles the media. You get the impression that Gross is used to fighting fires, which is a good thing, since he’s had to fight a few of them lately.
After suffering mass redemptions last year when PIMCO suffered record outflows of $41.1 billion. Gross must have been hoping 2014 would get off to a better start. Only to be hit by the surprise resignation of his chief lieutenant Mohamed El-Erian.
But Gross being Gross he has tried to turn a negative into a positive. Gross has taken the opportunity to shake up PIMCO’s management structure. In a transcript of a question-and-answer session posted on the company’s website, Gross said that the recent change in the asset management firm’s leadership will deliver long-term value for its clients.
This echoes statements he made in Februarys investment outlook, when he said. “we are a better team at this moment than we were before.”
PIMCO’s new management team now consists of six managers to serve as CIOs under Gross’s leadership.
Gross says he and his deputies “will take turns” leading daily meetings, which will allow for greater focus on certain sectors and regions. Mr. Gross said the interaction will help him learn more by listening, and “it gives others the opportunity to lead.”
It remains to be seen if this new management team is successful, but in the mean time they have their work cutout. Client redemptions continued in January, with clients pulling out $3.5 billion net cash from Gross’s flagship Total Return Fund.
Todays Other Top Stories
StarTribune: – Stadium’s bond sale generated purple buzz. – If you think the municipal bond business only gets exciting when a big issue goes into default, you need to know about the People’s Stadium bonds.
Bloomberg: – Jacksonville seeking utility payments to avoid Cut. – Jacksonville, Florida, with the third most underfunded pensions of the largest U.S. cities, is considering an unprecedented solution that may preserve its credit rating at the expense of its utility’s.
Crains Detroit Business: – Detroit lawyers: 3rd swaps settlement plan coming soon; general obligation bonds not secured. – The city of Detroit plans to file details of a proposed swaps settlement with UBS and Bank of America Merrill Lynch within three to four days.
About.com: – Introduction to municipal bonds. – A quick primer on the municipal bond market. Aimed at novice investors, this article covers the returns and risks associated with munis as well as the different types of munis available.
WSJ: – Fed minutes sting Treasury bonds. – Treasury bonds took a beating Wednesday after minutes from the Federal Reserve’s January meeting raised some anxiety that the central bank could increase short-term interest rates sooner than many expected.
MSN Money: – Long-term Treasury bonds are surprisingly hot. – Though interest rates are incredibly low, some investors are taking positions because they do not trust the economic environment that lies ahead.
Bloomberg: – China cuts Treasury holdings most since 2011 amid taper. – China, the largest foreign U.S. creditor, reduced holdings of U.S. Treasury debt in December by the most in two years as the Federal Reserve announced plans to slow asset purchases.
Businessweek: – Treasury 30-year TIPS auction attracts weakest demand since 2001. – The U.S. sale of $9 billion in 30-year Treasury Inflation Protected Securities drew the weakest demand in a dozen years amid stagnant inflation and as the Federal Reserve continues to reduce its bond purchases.
Fitch Ratings: – Industrials dominate U.S. corporate bond market. – The US corporate bond market grew 9% in 2013 to $4.7 trillion in size, according to Fitch Ratings. A new report shows industrial volume surged by 10% to $3.4 trillion on very strong issuance of $647 billion during the year.
Market Realist: – Why is the high yield bond market obsessed with refinancing? – There are mixed feelings about the high yield bond market. Issuers still look active. However, for high yield bond investors, the increase in long-term Treasury yields may remain a concern in relation to the improved market conditions.
New York Times: – Global bond frenzy raises concerns. – Prospecting for oil in Brazil, manufacturing steel in Russia, erecting skyscrapers in China: Global bond investors have financed some of the grandest investment projects taken on by emerging economies in recent years. But as growth falters in a number of developing nations, economists and regulators have become increasingly worried about the consequences of this borrowing frenzy
David Fabian: – A high-yield play on emerging markets. – No matter how you structure your income portfolio, I think it makes sense to include a position in emerging market bonds as a way to enhance your yield and seek higher returns. While there is the potential for downside risk if interest rates significantly rise or emerging markets once again experience slowing growth, I think that the risk to reward proposition is reasonable right here.
LearnBonds: – Changes coming in the future of bond trading. – There are changes coming in the future to bond trading. And, the change is going to be connected with electronics.
Bobsguide: – Tepid growth in 2013 pushes E-trading to 25% of global fixed-income volume. – Electronic trading systems increased their share of global fixed-income trading volume only slightly in 2013, bringing the proportion of total volume executed electronically to 25%.
Forbes: – Bonds: They’re not just for seniors. – So when and how should you add bonds to your portfolio? In this article, we’ll show you how investors at any stage of life can keep these fixed-income investments.
IFA: – The short-term strategy. – It might seem a little counter-intuitive to be thinking about buying into a bond fund during a year when all the signs are pointing toward rising yields and falling prices. Surely, you might suppose, the combination of the QE taper and the prospect of rising interest rates ought to have finished off what little remains of the market’s enthusiasm for debt?
Funds Europe: – Pension funds offer controversial yield view. – UK and Irish pension funds do not expect bond yields to rise dramatically in the next 12 months, meaning they are not taking action to protect their portfolios should interest rates go up, a survey indicates.
Morningstar: – A moderate mutual fund portfolio in 3 buckets. – We update the performance–and make one small adjustment–to our middle-of-the-road portfolio.
Worah: Overall CPI 1.6%, still too low. Yet cost of shelter up 2.6%. Need wage growth to keep shelter affordable.
— PIMCO (@PIMCO) February 20, 2014
Market Fed rate hike expectations modestly higher today but still more benign than current #Fed guidance.
— AnthonyValeri (@Anthony_Valeri) February 20, 2014
USTs start discounting no snow this Spring.
— Ed Bradford (@Fullcarry) February 20, 2014
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