Jerome Schneider: Manager of the Year for Fixed-Income

02/10/2016 9:00 am EST


The research team at Morningstar FundInvestor analyzes over a thousand fund managers and every year selects Morningstar Fund Managers of the Year. Here, analyst Sumit Desai looks at the Fixed-Income Fund Manager of the Year, PIMCO's Jerome Schneider.

It is unusual to see a manager nominated for the performance of a fund in the ultra short-bond Morningstar Category, a relatively conservative group typically run with durations of less than a year.

However, in a year when short-term rates rose sharply and many bond funds failed to earn a positive return, Jerome Schneider's performance at PIMCO Short-Term (PTSHX) stands out. The fund ranked in the top 1% of its Morningstar category.

This fund earned a 1.37% return in 2015, placing it in the top 1% of the ultra short-term bond category. The fund's returns also compare strongly with the short-term bond category norm, where portfolio durations range between roughly 1.0 and 3.5 years.

Schneider actively adjusted the fund's curve positioning and rate sensitivity over the course of the year, which contributed a healthy portion of its returns.

Schneider maintained a very short duration for the first half of the year, even briefly taking duration into slightly negative territory in January and February.

He then lengthened duration modestly later in the year, generally avoiding issues in the ultra-short reaches of the curve, sensitive to changing expectations surrounding Federal Reserve policy.

The stability and success of Schneider's team is important given that it helps in the running of short-term money for funds across the firm.

Schneider and his team also deserve some credit for helping navigate PIMCO's flagship fund through a multiyear period of sizable outflows, which was no small task given the magnitude of redemptions the firm saw in late 2014 and throughout 2015.

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