A former money manager at Newport Beach-based Pacific Investments Management Co. and his Aliso Viejo-based firm have been tapped to manage a commodities mutual fund.
John Brynjolfsson, managing director of Armored Wolf LLC, is co-managing the Eaton Vance Commodity Strategy Fund for Boston-based Eaton Vance Corp.
“The timing is right,” Brynjolfsson said. “The bull market has just begun in terms of the globalization and industrialization of commodities, particularly in developing markets.”
Paul Dickson, an emerging markets expert and managing director at Armored Wolf, is co-managing the fund.
Brynjolfsson used to run the Pimco Commodity Real Return Strategy Fund, which now has more than $16 billion in assets, according to Morningstar Inc.
The Pimco fund gained almost 40% last year, outpacing the 25% gain of Standard & Poor’s 500 index.
Brynjolfsson left Pimco at the end of 2007 to form Armored Wolf, which runs hedge funds and manages money for institutional investors. It has about $100 million under management.
Eaton Vance, which has about $160 billion under management, is looking to attract investment advisers who see commodities as a way to hedge against inflation, according to Payson Swaffield, the company’s chief investment officer.
“With developments in the way investors and their advisers are allocating portfolios with different types of alternative investments, we felt that it was a good time to look outside for a proven team of managers to handle a new, broadly-based commodity fund,” he said.
This is the first time Eaton Vance has hired outside managers for one of its bond funds.
“The success of a new Eaton Vance fund will bring even more recognition to Orange County within the industry and attract more talented (money) managers here in the future,” Brynjolfsson said.
Brynjolfsson and Dickson face a challenge in going up against Pimco to lure commodities investors.
Like Pimco, Eaton Vance is known for managing bond funds and uses a range of investment strategies, according to analysts.
Pimco dominates the world of bond funds with more than $1 trillion in assets under management.
Brynjolfsson worked at Pimco for 19 years. He started Pimco’s commodities fund in 2002 and managed it for five years until leaving to go out on his own.
The Eaton Vance fund is expected to trade in commodities and bonds as well as short them, according to Brynjolfsson. The co-managers also will invest in various types of Treasury Inflation-Protected Securities indexed to inflation as well as emerging market bonds.
“The new Eaton Vance fund is basically being more actively managed,” said Eric Jacobson, a Morningstar analyst who has been following Brynjolfsson’s career.
Like Pimco’s fund, the Eaton Vance fund is benchmarked against a Dow Jones-UBS commodities-based index.
It will shoot for 3% return above the index on an average year, according to Brynjolfsson.
