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PIMCO Makes Changes to BOND

Posted by Mike McLaughlin on Mar 13, 2017, in Thoughts , tagged with , , , ,

Last week PIMCO announced changes (PDF) to its flagship Total Return active ETF, BOND. The gist: different investment focus to meet changing investor needs, new management team, same ticker.

I had a quick comment in the Ignites story (subscription required) on the change in which another observer stated that the appropriate move for PIMCO in this case is to launch another product, not tweak BOND. I find the move interesting enough that I thought to cover a few more things. So, three points each on two topics:

What’s Important About the Context Surrounding the Change?

  1. BOND is roughly $2 billion in assets. Not to minimize those assets, but they’re small relative to the whole of the Total Return strategy (75B+ in the mutual fund alone) and the firm’s $1.5 trillion in AUM.
  2. In general, active ETFs have not taken off as some have hoped. It’s difficult to project that PIMCO’s changes to BOND put a significant short or mid-term influx of assets at risk.
  3. Positioning the move as being grounded in the changing needs of investors is (a) appealing given the nature of today’s bond market, and (b) credible given that PIMCO is altering a product that has performed well, not poorly.

So Why Might This be Worth Doing?

  1. The Total Return strategy has been on the defensive since the fallout from Bill Gross’s departure. At least for the ETF this move enables PIMCO to focus on client needs and the new (and strong) team as part of a more positive conversation.
  2. Transitioning an existing product avoids adding another active ETF into an already-crowded ETF market and one that (again) has not been overly conducive to active funds.
  3. The scale of the assets involved makes this a potentially-appealing learning exercise from a strategic standpoint. PIMCO can mine the implications of pivoting existing ETF offerings, recasting the messaging for Total Return, and the like. (I realize this is far-fetched but the move has me thinking about adopting the regular reinvention strategy of Chicago’s famous Next restaurant for an ETF.)

There are so many nuances to consider. Even the fact that the ticker symbol is unchanged has implications. After all, if people know only one thing about active ETFs, fixed income ETFs, and PIMCO ETFs, the BOND ticker is probably it. Will the ticker being the same undermine efforts to communicate the changes?

It will be interesting and fun to see how this ultimately plays out.

A Sea of Sameness: Marketing Multi-Asset Class Solutions

Posted by Mike McLaughlin on Dec 04, 2016, in Thoughts , tagged with , ,

In recent years survey after survey has shown that both asset managers and institutions alike anticipate significant growth in multi-asset class solutions (MACS). BlackRock has projected MACS to account for 25% of net new business within five years. It’s no surprise, then, that more and more firms (FundFire login required) are investing in their MACS businesses.

However, one element that appears to not be getting enough focus from the industry is the actual positioning and messaging of MACS. So I dissected how 11 high-profile providers initially introduce their capabilities. The result? Differentiated messaging is almost non-existent.

The goal was not to be exhaustive in analyzing the stories, nor to dig through tertiary details, but instead to catalogue the central elements. The sameness across the firms became apparent quickly:

macs-messaging

Despite the perceived opportunity, firms repeatedly fall back on consistent elements in messaging MACS. Trumpeting a collaborative process, a focus on client needs, or the size of the investment team does very little to distance one firm from the next.

Of course there are exceptions. For example, two of the firms provide strong specificity on risk management up-front in presenting MACS. But they are the exceptions. And so while there is a major opportunity to pursue with MACS, thus far the marketing does little to reflect that.

Positioning a New Product Family

Posted by Anu Heda on Mar 27, 2013, in Thoughts , tagged with ,

New ETFs from firms with no ETF history. Prestigious long-only managers launching alternatives. Massive non-US banks entering the domestic asset management landscape. All seem to be occurring at a more frenetic pace than ever.

We’ve been supporting clients in these and similar situations. A client from last year mentioned Killian Branding during an engagement. And their post recently on customer service is very poignant. More broadly than this post, our advice for clients in these situations is to carefully study the providers with significant market share. The burden of the new entrant is to provide a new reason to do business with them. Paradoxically, it’s a burden and a great opportunity.

Presenting Product (Alphabetic and Asset Class)

Posted by Anu Heda on Mar 26, 2013, in Thoughts , tagged with

You’re a mutual fund manufacturer with 50, 60, maybe even 100 mutual funds. On your Web site, the initial idea was to present them alphabetically. Perhaps, a few years later you broke them into asset classes, then alphabetic, but now you’re not sure at all what to present. Where’s a good place for ideas? Maybe look outside the industry for innovation?

I did a quick review of the four largest companies (I started by market cap, removed non-US companies and oil/gas companies).

  1. Apple – The homepage has no product section. “Store” is a natural proxy. And in the store, the products are grouped, well, similar to asset class. Instead of equities, there’s “Mac.” Instead of tax-exempt bonds, there’s “iPod.” The page has a featured fund, I mean product, and some left-hand navigation for the user who wants precision in her shopping.
  2. Microsoft – My first visit ever on this computer and Microsoft pops up a survey invitation. Really (right)?msft_popup Anyhow, there is a “Products” tab that presents a “mega-menu” organized by asset class (or product class here) first and then by business customer segment.
  3. IBM – Here I have to understand a “Product” versus a “Solution” (typical problem in our industry as well). I assume products are physical items IBM manufactures and solutions to be consulting and professional services. Clicking on “Products” shows me that I am – wrong. There’s software and professional services organized by product class here.
  4. GE – First I segment myself (let’s say I’m a business customer), then I see a massive list (below) of products organized by industry (again, akin to asset class). It’s the most daunting list and well, if I want to know more about “grid automation,” then I’m simply out of luck. No Web site for me!ge_pop

Two quick observations:

  • Organization is difficult. These large, established firms are full of very smart people trying to bring prospects and customers to the right place quickly. What are products and solutions to financial advisors, investment consultants, and institutions?
  • This cursory review does not imply an absence of great ideas outside the industry (I think there are multiple lessons to learn from Hulu, Zappos, & TaylorStich. More on those over a beer, though.) Simply that looking outside is a good input alongside internal groups and design partners.