The “Bond King” coming to Managed Futures

The Bond King

Look out Managed Futures! Here comes the Bond King! Bill Gross is buying the drawdown in managed futures…well sort of.

Right before everyone headed out for the weekend, we learned Pimco filed a preliminary prospectus with the SEC to start a Managed Futures mutual fund. We will be the first to explain why Managed futures Mutual funds are not the way to go, and if we had to guess – we would bet this will be a replication strategy, using some low cost indicator like the Diversified Trends Indicator to replicate managed futures performance. But at this point things a little premature to pass judgment, because all we have to go on is a Investment News report on what it will entail:

“The fund will invest long and short in a variety of asset classes, including interest rates, commodities and currencies.”


Now, Dan Collins over at the appropriately named Dan CollinsReport makes the argument this is a sort of timing move by Gross, getting into the asset class while it is underperforming.

But we’re not so sure this is a legendary investor doing some asset class timing for his business. Maybe they decided after the good performance in 2008 and it took this long to get it together?  Maybe it is their internal hedge against rising interest rates hurting their core bond funds? Maybe their building a new client for their bond funds, with the managed futures fund going to need a cash management overlay. Most likely, it is more just another step in Pimco’s quest for world domination via a continued move away from purely bonds and into stocks and alternatives. Per Investment News:

“Pimco has quietly been upping its alternatives presence over the past few years. Its alternative mutual funds have grown to more than $100 billion in assets, from $28 billion in 2008, as investors have increasingly looked for something different than traditional stocks and bonds.”

Whatever the reason – we can’t help but think one of the largest asset management companies in the world getting into managed futures is a good thing. At the least, it is a big stamp of approval from a very well respected investment firm. At the best, they will develop a 100 manager portfolio and start allocating billions around the world to deserving CTAs. Don’t hold your breath on the latter.


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  1. Jonathan says

    It will probably put pressure to remove performance fees on trend followers as I note many of these managed futures mutual funds only charge flat annual fees… You’d be better off paying some upfront load and no 20pc annual performance fees surely.

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