Jackson National, one of the largest variable annuity providers in the U.S., is planning to remove PIMCO’s total return strategy, made famous by Bill Gross until his high-profile departure in 2014, and replace it with DoubleLine’s core fixed income fund.
With a variable annuity, which is a tax-advantaged form of insurance, individuals get to choose money managers to oversee their underlying investments in the annuity. Insurance companies vet money managers and then create an authorized list of investments for clients to pick from. Jackson National will change the subadvisor for its JNL/Total Return Bond Fund from the PIMCO fund, which now has $3.4 billion in assets from the insurer’s clients, to DoubleLine Capital, according to a Securities and Exchange Commission filing.
Jackson National has offered the PIMCO total return strategy since 1998. The insurance company offers the investment strategy within a separate account created specifically for the variable annuity product. Since Gross’s departure, the PIMCO Total Return Fund has been overseen by Mark Kiesel, Mihir Worah and Scott Mather.
DoubleLine’s $8 billion Core Fixed Income Fund is co-managed by co-founder Jeffrey Gundlach and Jeffrey Sherman, the firm’s deputy chief investment officer. A PIMCO spokesman declined to comment. A spokesman for DoubleLine also declined to comment and referred questions to Jackson National. Jackson National did not return calls by press time.
Jackson National will continue to offer other PIMCO strategies, including PIMCO Real Return and PIMCO Credit Income, and is also planning to begin offering the PIMCO Income Fund, according to the SEC filing. PIMCO Income is one of the money manager’s best performing funds and its largest. The life insurance company is also planning to add other funds, including ten portfolios from the Vanguard Group, as well as funds from Invesco and other asset managers.
DoubleLine has been offering other funds in Jackson National’s variable annuity series, including the Total Return Bond strategy, which is focused on mortgage-backed securities; Emerging Markets Fixed Income; and the DoubleLine Shiller Enhanced CAPE fund, a smart beta equity fund.
Since Gross’s departure from PIMCO, clients have been draining assets from the total return fund. At its peak the fund managed more than $200 billion. Now it has $73.8 billion, according to Morningstar.
PIMCO’s Total Return Fund returned 2.88 percent annually over the past five years as of June 5, compared with the Bloomberg Barclays U.S. Aggregate bond index’s return of 2.27 percent. The DoubleLine Core Fixed Income Fund generated a 3.54 percent return annually over the same time period.
