HEAD-TO-HEAD: Blackrock vs Pimco

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Source: FE Analytics (fund NAVs in US dollars)

Performance

Both funds have delivered strong returns since their launch, despite adopting different investment strategies and styles.

“Pimco’s performance in 2018 was tremendous, outstripping 93% of its peers. The fund’s returns in 2017 were also impressive,” said Dobrescu.

She attributes its strong performance largely to the fund’s holdings in Danish securitised mortgages, which more than compensated for the detrimental effect of small allocations to inflation-linked bonds, high yield corporate issues and to currency overlay.

Pimco’s three-year cumulative performance of 11.91% is well-above the category average and exceeds the 7.44% return by the Blackrock fund, without a significant increased volatility.

Nevertheless, Blackrock’s Krautzberger has comfortably beaten its benchmark, the Bloomberg Barclays Euro Aggregate 500MM Index, both on an absolute and risk-adjusted basis since he took over in 2005.

“Remarkably, the fund has outperformed consistently in a variety of market environments, placing it in its category’s top half in every calendar year,” said Dobrescu.

“Although the number and complexity of the fund’s relative value trades makes it difficult to identify all contributions to the fund’s performance, there have been some selections that have been clearly positive,” she added.

These include an allocation to securitised bonds, an underweight Italy/overweight Spain position and a decision to shorten duration in early 2018.

Discrete annual performance %

 Source: FE Analytics

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