Pimco Income Fund, the
The $92 billion fund will increase its fees 5 cents per $100 on Oct. 2 for most share classes, according to a filing Thursday, bringing expenses for the institutional-class shares to 50 cents per $100. The change in supervisory and administrative fees is attributed in part to the cost of managing dividends for the growing fund, which has about 5,500 securities in numerous countries and currencies, said Pimco spokesman Michael Reid.
“Pimco Income Fund has delivered strong performance yet its total expense to investors remains lower than its peer group averages,” Reid said in an email. Pimco Income’s peer funds average fees are $1.01 per $100 in assets, according to data on the Morningstar website.
Investors have been moving money to low-fee, passively managed index funds, raising pressure on money managers to compete by reducing costs. Shareholders added a net $703.4 billion to passively run mutual and ETFs while withdrawing $214.5 billion from active funds in the 12 months through July, according to Morningstar.
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The shift in strategy comes as central banks move away from policies that have buttressed markets since the financial crisis.
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The average fee paid by investors fell to 57 basis points in 2016 from 61 in 2015 and 65 three years earlier, according to a May report by Morningstar. A basis point is one-hundredth of a percent.
On the passive investing side, big providers such as BlackRock, Vanguard, Fidelity Investments and Charles Schwab have cut fees on index funds and ETFs to as low as 3 or 4 cents for every $100 invested.
INVESTOR INFLOWS
Pimco CEO Emmanuel Roman has said his firm’s strategy is to provide benchmark beating risk-adjusted returns through active management, while charging “the right level” of fees.
No performance chasers here; these investors buy on the downside.
Pimco Income, managed by Dan Ivascyn and Alfred Murata, has added $23.5 billion in new investments in the past 12 months, more than any other actively managed U.S. fund, Morningstar estimates. It has returned an average of 7.6% annually over the past five years, outperforming 99% of its Bloomberg peer group.
Pimco is increasing the Income Fund’s Class D fees 11 basis points, according to the filing. The firm is also boosting fees by 5 basis points for Class D shares of the All Asset Fund and the All Asset All Authority Fund.
At the same time, the firm is lowering fees 11 basis points across share classes on its Unconstrained Bond Fund and 5 basis points on its Emerging Markets Corporate Bond Fund, Emerging Markets Full Spectrum Bond Fund and Global Advantage Strategy Bond Fund. For the Pimco Total Return Fund, fees are being cut 5 basis points on Class A shares and increased 5 basis points on Class D shares.
