Financial advisers' impressions of Pimco's brand fell significantly this year, according to a new study, but the firm Bill Gross built remains among the industry's most trusted money managers.
On a question that asks advisers annually about their impressions of dozens of mutual fund brands, Pimco fell to 15th from sixth in 2014, as former chief executive Mohamed A. El-Erian left the firm. The firm ranked first in 2013 when the study was conducted before a “Taper Tantrum” in May that year derailed some funds' performance.
Yet Pimco's ranking on a new metric — trust — shows the firm can still draw on an enviable level of support among advisers, according to one analyst. Twenty-two percent of advisers said they consider Pimco a brand they can trust, which puts them 15th among top mutual fund managers, according to the 2015 Advisor Brandscape report, which is prepared by Cogent Reports, a division of Market Strategies International.
Vague as the term may be, trust ranked ahead of a variety other variables, including consistent investment performance, value for the expense and a disciplined investing process, in terms of influencing which firms advisers wanted to do more business with, according to John Meunier, a managing director at Market Strategies International.
The Newport Beach, Calif., manager of $1.5 trillion, whose flagship Total Return Fund (PTTAX) has seen the swiftest cascade of money in mutual-fund history, is still working to turn its sales figures positive. In June, the once-mighty bond fund manager posted its 25th month of outflows in its mutual funds and ETFs traded in the U.S.
BEYOND AWARENESS
“It goes beyond just awareness. It goes beyond satisfaction and really incorporates an adviser's sense of a company,” said Mr. Meunier. “Loyalty is really about satisfaction and it's about how well the products you already own are performing and how satisfied you are with the relationship. Trust is more forward-looking,” meaning it can influence whether advisers will try new products from a firm.
The report is based on an online survey of 1,390 financial advisers with more than $5 million in assets under management. Those data, collected January to March this year, were adjusted to more accurately represent the proportions of advisers in the U.S. It has a margin of sampling error of plus or minus 2.6%.
In the case of Pacific Investment Management Co., the firm had to work quickly to evolve its image from a firm centered around the personality of Bill Gross, the co-founder who left the firm in September after fighting with other managers, to one that more explicitly boasted its team of previously faceless managers and their performance figures.
This year, as Total Return and 69 other funds have bled assets, 36 others are taking in assets. That includes the Pimco Income Fund (PONAX), a heavily promoted product with five-year performance that beats all peers of its ilk. The fund is the seventh top-selling so far this year in the U.S., bringing in $6.3 billion, according to Morningstar Inc.
Speaking at an investing conference last month, Pimco's chief executive said
money the firm is able to win will “not necessarily flow” into Total Return “because we live in a world of low rates and flat yield curves.
“Right now we're seeing people crowd into the front end of the yield curve with more of an income orientation,” said the executive, Douglas M. Hodge. “We've been responding to the demand for yield with, I think, some success.”
A spokeswoman for Pimco, Agnes Crane, declined to comment further.
But Matt Lynch, managing partner at Strategy & Resources, a consulting firm in Dayton, Ohio, said brand equity and trust are actually becoming a less relevant factor among many financial advisers.
“Advisers are more savvy today. They're actually giving smaller funds with less brand equity an opportunity to demonstrate value and not just adhering to the legacy brands,” said Mr. Lynch. “I really believe it's a good time for the smaller firms to be able to gain market share with good performance …. I don't know if the brand-equity question is as relevant as it was 10 years ago.”
The results come as fund managers amp up their efforts to sell through registered investment advisers, independent wealth-management firms that have been the main source of growth for the industry's headcount.
Last week, BlackRock Inc. chief executive officer Laurence D. Fink
said his firm hasn't yet matched some of its competitors' success winning the loyalty of those RIAs. He said gaining those firms' trust would be key to winning more business.
As ETFs have started to surpass mutual funds in retail sales, their growing popularity among RIAs has helped fund managers with a strong presence in that business. That includes New York-based BlackRock, whose iShares unit is the largest U.S. ETF business by assets. Vanguard, which ranked first in trust among RIAs and fourth among advisers overall, is among iShares' top competitors in the ETF business. BlackRock ranks seventh among RIAs and third overall.
