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PIMCO Income's Fee Hike Doesn't Hold Water

Not many funds or firms could get away with hiking fees as assets explode.

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PIMCO implemented a round of fee changes in October, including a sizable hike at  PIMCO Income  (PIMIX). PIMCO raised PIMCO Income’s fees by 5 basis points for all share classes, except the fund’s D class, which will see an 11-basis-point increase. (PIMCO is also raising fees for the D share classes of  PIMCO All Asset  (PASDX),  PIMCO All Asset All Authority  (PAUDX), and  PIMCO Total Return  (PTTDX) by 5 basis points.) At the same time, PIMCO cut the fees at a couple of funds. But because the funds seeing hikes are larger than those getting cuts, it works out to a substantial fee hike in aggregate.

The fee increase at PIMCO Income is odd considering that the fund is already a behemoth ($99 billion as of Sept. 30, 2017) and has been growing like gangbusters. (Assets in the overall strategy across PIMCO vehicles had surged an astounding 75% to $177 billion for the year to date through September 2017.) If PIMCO had done nothing, it still would have hauled in tens of millions in additional fees (that is, by levying the same percentage expense ratio on its larger asset base).

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