Pacific Investment Management Company, LLC, known more familiarly as PIMCO, is a massive hedge fund based in Newport Beach, California, just south of Los Angeles. The firm manages over $2.5 trillion in client assets and has 734 separate funds, otherwise known as pooled investment vehicles. It also has a team of over 700 financial advisor professionals and thousands more that help make the operation tick.
The firm manages a wide variety of asset classes aside from hedge funds, such as mutual funds, exchange-traded funds (ETFs) and private equity funds. Note that hedge funds are only available to accredited investors, but a financial advisor in your area can help you invest your assets.
PIMCO Background
PIMCO was founded in 1971 and has been in business in Newport Beach ever since. Both Alan Greenspan and Ben Bernanke, each former chairmen of the U.S. Federal Reserve, have worked at the firm. The firm is an indirect subsidiary of Allianz, a financial services company based in Germany. Allianz sells many of its own financial products as well, including life insurance and annuities.
This firm provides portfolio management, research and trading services from its offices around the world to different types of clients, including pension plans, foundations, endowments, retirement plans, corporate treasury assets, governments, sovereign wealth funds, insurance companies, high-net-worth individuals, financial institutions, intermediaries, retail investors and pooled investment vehicles.
PIMCO Investment Philosophy
When it comes to investing and managing the company's various funds, PIMCO looks to take advantage of macroeconomic forecasting, comprehensive sector analysis, comprehensive asset analysis and rigorous risk management processes. However, specific strategies vary depending upon the type of funds or product being focused on.
For example, when investing in regards to emerging markets, the firm uses country risk analysis, considers global trade relationships, conducts visits with the company or companies or even meets with government officers, business leaders, academics and politicians. If one had to describe PIMCO's overall strategy and philosophy when it comes to investing, comprehensive is certainly the word that would come to mind.
Largest Hedge Funds Managed by PIMCO
PIMCO Global Credit Opportunity Masterfund LDC
- AUM: $21,730,166,805
- Minimum: $5,000,000
- Beneficial Owners: 0
PIMCO Tactical Opportunities Masterfund Ltd.
- AUM: $9,432,786,158
- Minimum: $5,000,000
- Beneficial Owners: 0
PIMCO Absolute Return Strategy V Master Fund LDC
- AUM: $8,527,286,236
- Minimum: $5,000,000
- Beneficial Owners: 0
LVS III Holding LP
- AUM: $8,271,565,355
- Minimum: $5,000,000
- Beneficial Owners: 0
PIMCO Absolute Return Strategy IV eFund
- AUM: $7,869,758,102
- Minimum: $5,000,000
- Beneficial Owners: 1
Fees at PIMCO
Fees for the funds at PIMCO are charged to the fund itself, not the clients invested in the funds, as is the case when it comes to many hedge fund management companies. These fees are generally charged based on a percentage of the total market value of assets under management within each fund. Separately managed accounts are charged similarly.
Fee percentages for private funds tend to range from 0.00% to 1.60%. Administrative fees tend to range between 0.00% and 0.40%. The firm also charges performance-based fees to certain funds and accounts.
What to Watch Out For
As noted earlier, only accredited investors can invest in hedge funds. An accredited investor must have at least $200,000 of earned income ($300,000 for couples) in each of the past two years, as well as a reasonable assumption that that trend will continue for the current year. The other way you can be considered an accredited investor if is you have at least a $1 million net worth (minus the value of your primary residence) either on your own or together with a spouse.
The firm has four disclosures listed on its Form ADV. Two of these disclosures relate to advisory affiliates of the firm, whereas the other two belong to the firm itself. For the latter two disclosures, they relate to issues of insufficient disclosure of the performance of bonds and the exceeding of speculative position limits in specific futures contracts. In each of these cases, the firm paid fines, with the former disclosure also resulting in censure, disgorgement and a cease and desist order.
Becoming a Client of PIMCO
As noted above, you can only invest in one of PIMCO's hedge funds as an individual if you're an accredited investor. Should you meet this requirement, you can go online to the firm's website and visit its contact page. There, you'll find various addresses and phone numbers associated with certain funds.
You can also invest directly through PIMCO via the stock market by buying a PIMCO ETF or mutual fund. The firm itself is not publically traded, though.
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