Bloomberg News

Pimco to Co-Manage American Beacon Flexible Bond Fund

July 14, 2011

(Corrects location of Harbor Capital Advisors Inc. in third paragraph of story originally published July 11, 2011.)

July 11 (Bloomberg) -- Pacific Investment Management Co., the manager of the world’s biggest bond fund, will co-manage a fund started by American Beacon Advisors Inc. that seeks to produce a profit in rising and falling markets.

The American Beacon Flexible Bond Fund will be managed by a team led by the Fort Worth, Texas-based company. Pimco, Brandywine Global Investment Management LLC and GAM International Management Ltd. will be the fund’s sub-advisers, the companies said today in a statement.

Over the past year, fund managers including Loomis Sayles & Co. and Chicago-based Harbor Capital Advisors Inc. have opened funds that employ a so-called “go-anywhere” approach to better deal with risks such as rising interest rates. Boston-based Loomis Sayles this year opened the Loomis Sayles Absolute Strategies Fund, while Harbor Capital turned to Newport Beach, California-based Pimco to manage its Harbor Unconstrained Bond fund. Absolute return funds don’t measure their performance against a specific benchmark.

“Advisers and investors are embracing the shift toward more flexibility, seeking strategies that enable them to invest in an asset class, unconstrained by the restrictions of traditional benchmarks,” Gene L. Needles Jr., president and chief executive officer of American Beacon, said in the statement.

‘Pursue Maximum Value’

Needles said the fund will attempt “to capitalize on pricing dislocations and pursue maximum value wherever it may exist.”

The new fund will invest primarily in bonds, including those rated as junk, and also in interest rates and currencies. Junk bonds have a higher return and a higher yield than investment-grade bonds and are rated below Baa3 by Moody’s and less than BBB- by S&P. The fund can make use of derivatives, American Beacon said in the statement.

The $243 billion Pimco Total Return Fund, run by Bill Gross, is the world’s largest bond fund. Philadelphia-based Brandywine and GAM International, based in London, offer advisory services to funds.

--Editors: Steven Crabill, Christian Baumgaertel

To contact the reporter on this story: Laura Keeley in Boston at lkeeley1@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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