PIMCO fund rating cut by Morningstar analysts

NEW YORK Thu Nov 15, 2012 6:41pm EST

NEW YORK Nov 15 (Reuters) - Analysts at investment research firm Morningstar lowered the rating on PIMCO Global Multi-Asset fund by one notch to bronze from silver in response to the fund's underperformance relative to its benchmark and exposure to new management, the data firm said on Thursday.

The fund, which can invest in a wide range of securities, has $5.28 billion in assets and has earned an 8.4 percent return since its inception in October 2008, according to Morningstar.

That performance trails the 9.9 percent return of the fund's benchmark, which is composed of 60 percent of MSCI world equity index and 40 percent the Barclay's Capital U.S. Aggregate Index, according to Morningstar.

Michael Herbst, the Morningstar analyst who covers the fund, said the fund's underperformance to its benchmark and its holdings of certain PIMCO stock funds that are less than three years old were main reasons behind the rating cut.

The stock funds that Herbst cited were the PIMCO EqS Emerging Markets fund, the PIMCO EqS Pathfinder fund , and the PIMCO EqS Dividend.

The fund is co-managed by PIMCO co-chief investment officer Mohamed El-Erian and managing directors Curtis Mewbourne, Vineer Bhansali, and Saumil Parikh.

Herbst of Morningstar said the addition of Saumil Parikh to the fund's management in October also raised questions as to how he will manage the short-term investments of the fund.

A PIMCO spokesman was not immediately available for comment.

Pacific Investment Management Co., based in Newport Beach, California, had $1.92 trillion in assets as of Sept. 30. PIMCO is home to the world's largest mutual fund, the PIMCO Total Return Fund, with $281 billion in assets and managed by Bill Gross, the firm's founder and co-chief investment officer.

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