Bill Gross Bill Gross, managing director and co-chief investment officer of PIMCO, was named fund leader of the year on Thursday night by FA at the 16th Annual Mutual Fund Awards. Investment strategy put into place by Gross helped PIMCO become the top performing firm—its funds beat 82% of their peers on average—since the market reached its high in October 2007, according to Morningstar. Gross bought up securities linked to the performance of Treasury debt and plunged into mortgage securities, correctly betting that the Federal Reserve would lower interest rates and aid the housing market by cutting mortgage rates. As a result, PIMCO was one of the few firms to grow its assets in 2008, up 3% to about $220.3 billion at year’s end.
Bill Gross
Gross’ skill also got the notice of the government, with PIMCO landing a contract from the Fed as one of four managers of a $500 billion program to purchase mortgage-backed securities. Two months before, PIMCO was tapped as one of the asset managers for the Fed’s commercial paper funding facility and it also advised the government on the value of $118 billion in assets guaranteed in the bailout of Bank of America. The firm was expected to be appointed to manage debt for the Troubled Asset Relief Program before the Treasury Department decided to use those funds to prop up troubled firms rather than buy toxic debt.
PIMCO was also responsive to panicked investors during the market meltdown last fall and Gross was a familiar face on television screens and in print calling for an economic bailout from the government. Research firm kasina named PIMCO as one of the firms that provided excellent service to advisors during the market crisis.
Since the crisis, Gross and his colleagues have been steering PIMCO on a course to capitalize on the market turmoil. The firm has been implementing a strategy to target high-quality corporate debt as dynamics change between the government and the private sector, launching several funds including its first retail money market fund. Gross summed up his view on the subject in one recent market commentary in which he discussed cooperating with the government. “Make them your partner by acknowledging that their checkbook represents the largest and most potent source of buying power in 2009 and beyond.”