Pimco's Mather says bond investors must
revise return expectations
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[October 11, 2014]
BERLIN (Reuters) - Bond investors
need to revise their expectations of the returns they can make in the
years ahead, said Scott Mather, one of three Pimco managers who run the
firm's Total Return Fund following the shock exit of co-founder Bill
Gross last month.
In an interview with Germany's Boersen-Zeitung newspaper, Mather,
Chief Investment Officer for U.S. core strategies at Pimco, said:
"Even if interest rates gradually increase, with a global portfolio
of bonds with the best creditworthiness you can maybe expect a
return of about 3 percent in the coming years."
He said investors could earn a "little more" but not much more with
Pimco's flagship Total Return Fund has seen heavy outflows since
Gross announced last month he was leaving the Newport Beach,
California-based firm he started in the 1970s to join smaller rival
Janus Capital Group.
Mather, who told the paper the investment process would not change
with Gross gone, said he saw opportunities in peripheral euro zone
countries and in contingent convertible "CoCo" bonds, a complex form
of hybrid debt.
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He said that many CoCo bonds had been issued and not all of them had
found investors. "We believe they are cheap," he told the paper.
Pimco is a unit of German insurance group Allianz.
(Reporting by Victoria Bryan; Editing by Noah Barkin)
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