UBS Wealth Management Americas is preventing some clients from investing in Pimco funds following the abrupt departure of the money manager's co-founder and chief investment officer, Bill Gross, according to an employee with knowledge of the action.
A number of broker-dealers routinely put funds on a so-called “watch” list when management changes occur.
But UBS' decision appears to mark the first time some flows have been blocked to Pimco by a wirehouse.
UBS clients who already invest in Pimco funds can continue to buy and sell without limitation. But clients without exposure to Pimco will not be allowed to invest in that fund lineup until its new management has been evaluated, according to the source, who is not authorized to speak on the record.
The decision was described as being in keeping with the firm's practice when portfolio managers change. Spokespeople for UBS Wealth Management Americas declined to comment.
UBS' U.S. wealth division employs 7,119 advisers and manages more than $1 trillion in client assets.
While investors have already withdrawn billions in the immediate aftermath of Mr. Gross' departure — $23.5 billion left Pimco's flagship Total Return Fund (PTTAX) last month — Pimco now must undergo a lengthy process to retain its blue-ribbon status with consultants and researchers who serve broker-dealer platforms, pension funds and other professional investors. The endorsement of those researchers can be crucial for fund managers.
The Consulting Group Investment Advisor Research team at Morgan Stanley removed Pimco Total Return and the Pimco Low Duration Fund (PTLAX) from its “focus” list for funds that have passed what the firm calls “a thorough evaluation.” Those funds now reside on an “approved list,” for funds that have gone through a less-comprehensive evaluation.
Both were managed by Mr. Gross until
his resignation on Sept. 26. He now manages the Janus Global Unconstrained Bond Fund (JUCAX).
Neither Wells Fargo Advisors nor Bank of America Merrill Lynch, which complete the group of four wirehouses, have blocked new client flows into Pimco funds, according to people with knowledge of each firm. Merrill Lynch does have Pimco funds at a “yellow” rating, which flags the funds' changes to advisers but doesn't restrict flows, according to an employee there.
The wirehouses' decisions
were first reported Tuesday by the Wall Street Journal.
