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Ivascyn: Growth Not (Yet) a Problem for PIMCO Income

Dan Ivascyn says the global mandate has allowed him and comanager Alfred Murata to handle inflows without sacrificing risk-adjusted return.


Eric Jacobson: One of the funds that you manage personally is the PIMCO Income Fund, along with your comanager Alfred Murata. What are the challenges of running a fund like that, that has been so popular and growing so much?

Dan Ivascyn: Well, there are no unique challenges at the moment relating to fund size. As you know we have a very flexible global mandate. We're not tethered to any particular benchmark, and we have the ability to utilize the full global set of tools at PIMCO, which includes almost 250 portfolio managers. So, we've been pleased that we've been able to maintain performance during this period of growth. If we get into a situation where we feel that growth is limiting our ability to provide good value to clients--when I talk about value it's not just return, it's risk-adjusted returns--we'll consider steps to reduce those inflows. But we're nowhere close to that point currently. But it's something that if necessary we will certainly do.

The Income fund in general is a fund that really is designed to not only generate a nice income stream, but also defend client capital during difficult market environments. And we at PIMCO still think we have the tools necessary to be able to do that. But it's hard work, it's a work in progress. I am glad to have a colleague like Alfred Murata on the team, and quite frankly Alfred and I have the easy job. It's all the portfolio managers behind the scenes that are doing the heavy lifting.

Jacobson: What have been the greatest challenges to your overall role at PIMCO since taking it on a couple of years ago already?

Ivascyn: Well, the markets keep us busy, but the challenges haven't been related to the markets or the PIMCO investment process. We have a process and a key set of structures that Bill Gross left us with which we continue to use today. So, from that perspective I have been very proud of the team, the hard work. As you know I have tremendously strong relationships with other members of the leadership team. We've worked together in some cases for almost 20 years. 

The challenge I think in some respect was getting our message out to clients and introducing our clients to the depth and breadth of the resources that we have at our disposal. Because we were well-known for the founder and Bill had a very significant profile, but really was trying to get that message out to the group.

Then the other area of focus for us is creating the environment so portfolio managers can focus on what’s most important at the end of the day and that’s client risk-adjusted returns. We want to provide good service, but at the end of the day that's what we are looking to generate. And even in the executive office bringing Manny Roman into the team where we have Jay Jacobs, Doug Hodge, other key members staying on board, we've strengthened that group to a point where I am confident that portfolio managers can continue to do what you want us to do, what our clients want us to do, and that is focusing on managing money in an active fashion in very challenging market environments.

Eric Jacobson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.