Important Notice Regarding PIMCO Funds


October 2, 2014

Bill Gross, the founder and Chief Investment Officer of PIMCO, as well as the Lead Portfolio Manager of the flagship PIMCO Total Return Bond Fund and a few other strategies, resigned from PIMCO on Friday, September 26, 2014.   The BOK research and due diligence team has been monitoring this situation closely.  Two calls were held with PIMCO on Friday, September 26, 2014 and a third call on Monday, September 29, 2014 with Dan Ivascyn, the new Chief Investment Officer of PIMCO, and others from the executive team of the firm.

While the research and due diligence team remains impressed with the breadth and depth of PIMCO’s investment team and still have confidence in the firm, they are replacing the PIMCO Total Return Fund (PTTRX) with the Metropolitan West Total Return Bond Fund (MWTIX) within the WealthBuilder Strategies and MAP Target Date strategies this week.  It is believed that this strategy has the potential to face significant outflows that could negatively impact the new management team’s ability to effectively manage the portfolio.  This decision to terminate has not been taken lightly and is based on a number of factors.

It has been taken into consideration that there may be stress to the fund as a result of the manager and organizational changes, as well as the unknown cost on the management team and the portfolios they manage.   The decision was based on the opportunity to find a suitable replacement with a strong track record and a superb management team that will have the flexibility to manage portfolios unencumbered by organizational disruption and potentially significant redemptions.

The team is placing all other PIMCO strategies not previously managed by Bill Gross on Watch status, and will closely monitor the redemptions from these funds over the coming months.  If it is believed that the redemptions may have a significant negative impact on these strategies as well, the team may recommend action at that time.  Accordingly, the PIMCO All Asset Fund is being placed on Watch status in the UPAL Retirement Program – Alternative Investment Pooled Fund. 

Long-term, it is believed that the newly appointed CIO, Deputy CIOs, and the new portfolio management teams could result in positives for the firm and for their investment process.  However, in the short-term, the asymmetric risk to the downside is of concern to the team which feels that the recommendations above are most appropriate for UPAL clients.

If you have any questions or concerns, please feel free to contact Don Orchard or Kent Butcher at UPAL at 918-747-5585 or Clint Dishman at BOK at 918-594-7757.

Thank you.