Nic Johnson began his career working on rockets sent to Mars.
Last year, his financial career took off as three funds he manages ranked in the top five in returns at Newport Beach’s Pimco.
His Real Estate Real Return Strategy Fund (PRRSX) returned 54% in 2021, the biggest gain among the 96 funds at the wealth management giant.
Johnson’s fund topped its benchmark index by a whopping 1,511 basis points, according to Morningstar, which ranked his fund No. 1 out of 253 funds in its category.
“We had turbocharged returns,” Johnson told the Business Journal in an interview.
“This is a fund that we really like. It’s for people who want a liquid real estate exposure.”
Pimco, which has $2.2 trillion in assets, turned in a relatively good year as about 64 of its funds reported a gain last year, including 34 that topped 10% growth.
Pimco’s Income Fund (PIMIX), its biggest with $144.6 billion in assets, reported a 2.6% gain in 2021, topping its category by 249 basis points.
That fund is managed by Dan Ivascyn, who is also chief investment officer, a position he took over in 2014 from Pimco co-founder and legendary bond investor Bill Gross.
Rocket Man
Johnson is also a portfolio co-manager at several other Pimco funds that performed well last year, including the No. 2 CommoditiesPLUS Strategy Fund (PCLIX), with $2.6 billion AUM, up 44% last year, and the No. 5 CommodityRealReturn Strategy Fund (PCRIX), with $7 billion, up 33%.
A fourth fund he co-manages, the $2 billion Inflation Response Multi-Asset Fund (PIRMX) also rose a respectable 14%.
Jet-Setter
Prior to joining Pimco in 2004, Johnson was a mechanical engineer at NASA’s Jet Propulsion Laboratory, helping to develop Mars missions and new methods of autonomous navigation.
He switched to the financial sector when he realized the payoff could be a lot higher.
“It’s similar in a lot of ways,” Johnson said about the two fields. “My background was as a mechanical engineer building models and trying to explain how things work. In finance, it’s quite similar. I predict future values.”
Commodity Expert
Johnson, a managing director in the Newport Beach office, leads the commodity portfolio management group. In 2012 he co-authored “Intelligent Commodity Indexing.”
Johnson has been portfolio manager of the Real Estate Real Return Strategy Fund since 2015. In the last three years, which is a benchmark for how portfolio managers are graded, the fund returned an average 23%.
The fund, which he manages along with Stephen A. Rodosky and Daniel He, invests in real estate investment trusts (REITs) backed by a collateral portfolio of Treasury Inflated Protection Securities (TIPS).
“TIPS did really well given the increased rise in inflation and fact that Fed kept rates low,” Johnson said.
The fund, which has $1.5 billion in assets, last year actively increased its exposure to REITs that focused on apartments, data centers, student housing and gaming centers, Johnson said.
“REITs overall as asset class are attractively priced,” Johnson said.
“It makes a lot of sense for people. The correlation between REITs and commercial real estate is incredibly high.”
