The strongest Sharpe ratio, of 1.9, belongs to another bond star, Daniel Ivascyn. His $108 billion Pimco Income Fund had net inflows in 2017 of more than $31 billion, as the portfolio continued to beat its peers. (SIO grew by $4.6 billion in 2017.) Rieder was off to a hot start this year, with SIO up 1.3 percent through Jan. 25, the best of the 13. Ivascyn’s was flat.
If there’s a bicoastal rivalry simmering between the two fund managers, neither will admit it. That’s a breath of fresh air in a bond market seemingly dominated by egos. Bill Gross and Mohamed El-Erian famously clashed years ago at Pimco. Jeffrey Gundlach, chief investment officer of DoubleLine Capital LP, has struck a combative tone on Twitter. Fellow West Coast CIO Scott Minerd of Guggenheim Partners has downplayed reported turmoil within Guggenheim.
Rieder says his frustration with the finance industry is that “it’s all about momentum and hearsay, and it just doesn’t work.”
Fortunately for him, he’s in a position to remain above the fray. He usually meets with Fink multiple times a week, swapping his analytical perspective for what his boss gleans from meetings with corporate and government leaders. Rieder is a member of the Federal Reserve Bank of New York’s Investor Advisory Committee on Financial Markets and formerly served as vice chairman of the influential Treasury Borrowing Advisory Committee.
“He sits in a very important seat—he sees so much of what’s going on in the fixed-income world,” says Leon Cooperman, the billionaire founder of hedge fund Omega Advisors. “If I’m thinking of doing something in bonds, I check my own views often against his, because I respect his input. He’s willing to share his views. He’s not a taker.”
After Pimco Managing Director Richard Clarida emerged as a candidate for Fed vice chairman (albeit unsuccessfully), it’s only natural to wonder if a role at the central bank or Treasury could lure BlackRock’s fixed-income chief, who’s advised both institutions. Fink himself was rumored to be a Treasury Secretary candidate if Hillary Clinton became president.
“I can’t see it anytime soon. But at some point in my life, I could see myself doing something in public service,” Rieder says. He links his interest back to his work with the North Star charter schools. “I have some very deep beliefs in terms of doing things that help the broader community.”
For now, though, his focus is on delivering returns. He says meeting with teachers unions and police unions puts in stark relief who’s counting on his leadership at the world’s largest money manager.
Rieder turns back to his favorite descriptor. “We are maniacal about knowing where our risks are,” he says, admitting he could ballpark most of those minuscule numbers sprawled across the big-screen TV in his office without looking. Whether that drive is healthy is up for debate. “I’m not sure if it’s the right answer,” he says. “But it’s the right answer for me.”
Chappatta covers U.S. Treasuries at Bloomberg News in New York.