Chillin' out till it needs to be funded
Even as Bill Gross and Mohd El Erian expounded on the various policy flaws of the US and even /Central Bankers across the pond, the institution they represent has bled enough for Global policy makers to put them in the Too Big to Fail category in advance of any systemic failures from holding and buying US Treasuries on the way down for one.
Reuters expounds in the video below, even as the gravy train pulled out of PIMCO place’ private yard and investors fled the scene in 2011, his most fund outflows in two decades to top the losses his flagship Total Return Fund heaped on investors. PIMCO’s many good bets were nullified by the year he went short on US Treasuries. Now he’s long US Treasuries when he will virtuallget notreturns from UST and yields are recovering from their all time low, giving him small worries everyday.
The “SIFI” tag will of course help the fund but the fund will have to bear costs of tighter regulatory oversight and pay up in capital reserves so he can be bailed out without guilt as and when he does fail. The fund had doubled in size in three years of the crisis
PIMCO is being blamed for Hubris even as its Flagship fund the TRF had $240 bln in assets in 2010 (US:PTTAX/PTTRX) before he made the long bet on US Treasuries, and is holding at $250 bln at the end of January 2011. The Fund’s investors have earned 93% since 01/01/2002