PIMCO and Their Lies

[The White Coat Investor]

I just received an email from PIMCO. It says this about their bond ETF (BOND):

PIMCO TOTAL RETURN ACTIVE ETF (BOND)

In challenging markets, it doesn’t pay to be passive

In a year when investors needed yield, BOND delivered. Our four-star rated ETF solidly outperformed both its benchmark and peers in the Morningstar intermediate-term bond category in 2015 – a testament to the value of active management in a challenging environment. BOND has also outperformed over the longer term – delivering benchmark-beating returns while managing risk since its launch 4 years ago.

You would think after reading that, that PIMCO would be way better than a passive bond ETF, right? Well, if you were going to buy a passive ETF, which one would you buy? Well, I think most of us would say, "Well, Vanguard has one of those, doesn't it?" And surely it does (BND). So how did BND compare to BOND over that time period? Very well it turns out:

According to Morningstar,

YTD

PIMCO: -0.10%

Vanguard: 1.72%

 

Last 1 year

PIMCO: -1.32%

Vanguard: 1.21%

 

Last 3 years

PIMCO: 1.81%

Vanguard: 1.99%

 

It's just a lie that their active fund beats passive. Did it beat its benchmark? I guess. Did it beat its peers? Apparently. Did it beat "passive?" Nope. Does it pay to be passive? Sure does.

Shame on the marketing team at PIMCO.

 

[Zaphod]

Helps to be able to choose your benchmark. I also out performed my benchmark by nearly 1200% last year.

As an aside, etfs arent the best structures for bonds.

[PhysicianOnFIRE]

A month or 2 ago, CNBC was on in the lounge.  They had a fund manager on for the Parnassus Fund (PARNX with ER 0.84) and they were asking how he managed to beat the markets year in and year out.  The scroll at the bottom bragged about the fund's performance.  I looked it up plotted against the S&P 500.  PARNX underperforms in every time period, short term, medium, and long.  Either I'm missing something, or the TV lied.

[PhysicianOnFIRE]

A month or 2 ago, CNBC was on in the lounge.  They had a fund manager on for the Parnassus Fund (PARNX with ER 0.84) and they were asking how he managed to beat the markets year in and year out.  The scroll at the bottom bragged about the fund's performance.  I looked it up plotted against the S&P 500.  PARNX underperforms in every time period, short term, medium, and long.  Either I'm missing something, or the TV lied.

[VagabondMD]

Re: PARNX, they have had a recent period of underperformance, over the last 4-6 months or so, but until that time, they were beating the S&P 500 for various years and lookback periods.

As for the PIMCO claims, the data I am viewing has BOND beating BND in 2013, 2014, and 2015. Again, recent underperformance is weighing down the trailing returns, but if this is the most egregious lie in the investing business, well, I would be a far richer man! Remember, too, that the ad copy is probably written several weeks to months before you see it.

[The White Coat Investor]

Vagabond MD wrote:

Re: PARNX, they have had a recent period of underperformance, over the last 4-6 months or so, but until that time, they were beating the S&P 500 for various years and lookback periods.

As for the PIMCO claims, the date I am viewing has BOND beating BND in 2013, 2014, and 2015. Again, recent underperformance is weighing down the trailing returns, but if this is the most egregious lie in the investing business, well, I would be a far richer man! Remember, too, that the ad copy is probably written several weeks to months before you see it.

Click to expand...

Yea, it's pretty minor as lies go. And this is all aside from the fact that 3 years of performance means almost nothing. At any rate, I found it funny to see them saying how awesome active is compared to passive and then when I actually looked at the record to find out they didn't even beat TBM since their inception a few years ago.

PIMCO's overall record with their bond funds is actually pretty good despite their relatively high ERs.

[uptoolate]

PhysicianOnFIRE wrote:

... or the TV lied.

Click to expand...

What!?! Lies on the TV?! Say it ain't so Joe!