I went to a posh PIMCO conference at the Langham Hotel, I got very bored and left after the first session.
Later that week PIMCO announced that their bond guru Bill Gross had left them. The story was that it was all succession planned thought the New York Times saw it as Gross’ hubris (is anyone bigger than the market – answer PIMCO is the market).
I so don’t care about Gross… What do I care about?
First Actuarial buy bonds, either we buy them through indexed funds that give us the market return less the fees of the fund or we purchase bonds of an appropriate quality and duration for our customer’s needs.
Our more sophisticated customers do want guidance on how to squeeze more juice out of the bond lemon but we really don’t need terms like PIMCO’s New Neutral to tell us that we are in a low inflation , low return climate, we just have to look at the base rates of the major economies. I do want to understand bonds but I want practical help in applying what I learn to what I do. The conference seemed to exist in a cloud of abstraction.
But my main reason for leaving wasn’t that I was wasting my time, I had perfectly good wi-fi in the Langham ballroom. The reason was that between doing my emails, I paid attention to what the speakers were saying- and what those in the audience were writing in their PIMCO notebooks. The audience were not asking questions, they were simply transcribing the bullets on the slides. Those on the podium were slickly rehearsed, this was how PIMCO made the market.
The main reason I left was that had I stayed, I would have asked another embarrassing question as I did at the Schroders conference and at the bigwigs event at Eversheds, along the lines of
“The Emperor isn’t wearing any clothes”
The event was a bit itself!
So much for the event – what about PIMCO and the markets?
I am an admirer of PIMCO as a fund manager, they run their funds efficiently, have good researchers who make few mistakes. Gross may have screwed up on US Treasuries in 2011 but one blooper shouldn’t mess up a manager’s reputation.
But I don’t get this New Neutral thing of theirs , I’m not really that interested in the office politics surrounding Gross’ departure and I’m certainly not interested in re-hashing the PIMCO view of the market to our investment consultants and to our clients.
What I had come for was to find out whether PIMCO are going to apply themselves to providing better outcomes for UK DC clients (which Will Alport says they are). But the conference appeared to have another ten sessions on the New Neutral to come.
What’s the future for this circus?
When I left, around 150 investment consultants were troughing coffee and nibbles and discussing the decision of CALPERS not to pay inordinate fees to hedge fund managers. Would the hedgies win out as the UK active managers seem to be doing in the face of a similar threat from LGPS?
After I left, I started getting panicky invitations to attend PIMCO web-conferences to understand why the departure of Bill Gross didn’t matter. As if I didn’t know that- perhaps it mattered to my fellow attendees. Does Bill Gross really matter? Do PIMCO really care about pension outcomes?
I don’t know, I do care. The real discussions are about the new clothes that these guys will have to wear when a few more people point out the naked absurdity of this part of the financial services “Emporio”.