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Derivatives

Credit Investor Of The Year

In a year where investors scrambled for a safe place to park cash, PIMCO was among a handful of firms that weathered the storm and attracted new assets.

PIMCO

In a year where investors scrambled for a safe place to park cash, PIMCO was among a handful of firms that weathered the storm and attracted new assets. The Newport Beach, Calif.-based money manager called the top of the credit peak before its peers and has been benefiting from the widening in spreads.

PIMCO was underweight financials and the sub-prime mortgage market for most of 2006. Now that spreads on those names have widened by hundreds of basis points, portfolio managers including Mark Kiesel and Mark Hudoff have found new opportunities to buy oversold credits. In early July, PIMCO sold protection on the CDX near the widest spread levels, when CDX was trading cheap to both its underlying and cash bonds.

PIMCO is known as one of the best relative value managers on the Street, moving in and out of synthetic and cash positions quickly and in size. "Because they are so active in buying in the new issue market, they have a leg up on determining values," said a credit trader.

PIMCO has also been quick to embrace emerging strategies in the credit derivatives market. The firm recently paired up with Morgan Stanley to offer constant proportion portfolio insurance notes linked to its USD6.9 billion High-Yield Fund. Although the firm is a favorite with pension funds and mutual fund customers, increasingly PIMCO has become a force in more sophisticated areas of the market. Structured credit salespeople ranked PIMCO in the top-tier for managed synthetic collateralized debt obligations. In addition, the firm manages a credit hedge fund plus a newly launched distressed mortgage fund headed up by portfolio managers Dan Ivascyn and Scott Simon.

Other Nominees:

* BlueMountain Capital management * ICICI Bank

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