BlackRock oversees $1.2 trillion of debt, compared with $483.2 billion in December 2008, according to the firm’s financial filings. Pimco manages $1.9 trillion of assets, with more than 90 percent in bond-related funds, versus $960 billion of assets five years earlier.
Enjoying Perks
Bridgewater’s All Weather fund, which emphasizes debt- related investments, has quadrupled since the end of 2009 to about $80 billion in assets, according to data compiled by Bloomberg. BlueCrest, co-founded by former JPMorgan Chase & Co. proprietary trader Michael Platt, has expanded to include about $32 billion of assets since its 2000 inception.
Hedge funds with more than $1 billion under management hold 59 percent of debt assets among similar firms, up from 29 percent in 2008, according to data compiled by Eurekahedge Pte Ltd., an alternative investment research firm, on relative-value strategies.
While they enjoy perks, bigger funds can also have a harder time being nimble as trading falls as a proportion of the total market.
Worst Returns
Pimco has faced withdrawals at the same time former Chief Executive Officer Mohamed El-Erian resigned in January.
The company’s $232 billion Total Return Fund produced the worst risk-adjusted return over the past year among 16 U.S. intermediate-term funds with at least $5 billion in assets, according to the Bloomberg Riskless Return Ranking. As shorter- maturity debt tumbled in anticipation of rising interest rates, Gross’s fund posted the second-worst returns and second-highest volatility in the group.
When Gross sells, it resonates throughout the market -- and a world of falling bond prices may be about to take hold. Analysts surveyed by Bloomberg predict yields on the 10-year Treasury will climb to 3.33 percent at year-end and reach 3.60 percent in the first half of 2015.
The SEC’s priorities for the year include monitoring “the risks associated with a changing interest-rate environment and the impact this may have on bond funds,” according to a January memo from the agency’s Office of Compliance Inspections and Examinations.