Behavioral Insights

Combating Groupthink in PIMCO’s Process

Group CIO Dan Ivascyn talks about how PIMCO’s Investment Committee works to avoid groupthink with the ultimate goal of making better decisions on behalf of our clients.

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David Fisher, Head of Traditional Product Strategies:Now, one of the pitfalls that investment managers can fall into is becoming overly confident in their outlook. So how does PIMCO help avoid groupthink, or having too much conviction in that baseline outlook?

Dan Ivascyn, Group Chief Investment Officer:Sure. That’s an area, as you know, that we’ve worked on over the course of the last several years. It continues to be a key priority, and I believe we are making significant strides in increasing optimal decision-making, or increasing our focus on optimal decision-making. One thing that we’ve done increasingly is to measure our views a bit more. We’ve always had a macro-oriented investment process that is centered around our forums.

Shots from a PIMCO forum.

At the start of our forums, each period today, we take a very hard and precise view towards the decisions that we made in prior periods.

We’ve begun to formalize that more, with a higher degree of precision, where we look back on and focus in particular on areas that we missed, areas where our decisions or our process perhaps was lacking in some areas, and where there were more opportunities for improvement.

Shots from a PIMCO meetings and employees workings.

During our more frequent investment committee discussions, we’re also measuring much more frequently, both individual views, group views, and how those views evolve over time. And then using technology, using more abundant data to be much more precise in terms of overall portfolio attribution.

A lot more investment in technology, a lot more investment in data, and using independent teams within analytics, risk management in the portfolio group to help guide this process, to act as independent referees, if you will, to ensure that we have as an objective a process and decision-making framework as possible. We’re working very, very hard as a group to be more efficient and more effective on behalf of our client base.

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All investments contain risk and may lose value. Investors should consult their investment professional prior to making an investment decision.

This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This is not an offer to any person in any jurisdiction where unlawful or unauthorized. | Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660 is regulated by the United States Securities and Exchange Commission. | PIMCO Europe Ltd (Company No. 2604517) and PIMCO Europe Ltd - Italy (Company No. 07533910969) are authorised and regulated by the Financial Conduct Authority (12 Endeavour Square, London E20 1JN) in the UK. The Italy branch is additionally regulated by the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act. PIMCO Europe Ltd services are available only to professional clients as defined in the Financial Conduct Authority’s Handbook and are not available to individual investors, who should not rely on this communication. | PIMCO Deutschland GmbH (Company No. 192083, Seidlstr. 24-24a, 80335 Munich, Germany), PIMCO Deutschland GmbH Italian Branch (Company No. 10005170963) and PIMCO Deutschland GmbH Spanish Branch (N.I.F. W2765338E) are authorised and regulated by the German Federal Financial Supervisory Authority (BaFin) (Marie- Curie-Str. 24-28, 60439 Frankfurt am Main) in Germany in accordance with Section 32 of the German Banking Act (KWG). The Italian Branch and Spanish Branch are additionally supervised by the Commissione Nazionale per le Società e la Borsa (CONSOB) in accordance with Article 27 of the Italian Consolidated Financial Act and the Comisión Nacional del Mercado de Valores (CNMV) in accordance with obligations stipulated in articles 168 and  203  to 224, as well as obligations contained in Tile V, Section I of the Law on the Securities Market (LSM) and in articles 111, 114 and 117 of Royal Decree 217/2008, respectively. The services provided by PIMCO Deutschland GmbH are available only to professional clients as defined in Section 67 para. 2 German Securities Trading Act (WpHG). They are not available to individual investors, who should not rely on this communication. | PIMCO (Schweiz) GmbH (registered in Switzerland, Company No. CH-020.4.038.582-2), Brandschenkestrasse 41, 8002 Zurich, Switzerland, Tel: + 41 44 512 49 10. 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CMR2020-0210-438078

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