Bond giant PIMCO could enter the active equity management business according to Pensions & Investments (P&I).
This would create a huge new competitor in the space.
After a slam-dunk 2009 whereby PIMCO attracted massive inflows into the company’s bond funds, an aggressive equities management build-out would signal their confidence in the long-term outlook for equities, despite whatever bearish near-term views may be coming out of PIMCO’s Bill Gross currently.
From a business perspective, this sounds like it will be a great move. They can capitalise on their bond fame while bonds enjoy relative favour with investors, anduse it to build a reputation for equity investing, thus positioning for the future.
Asset class popularity goes in cycles, and PIMCO wants to be ready for the next.
P&I: In October 2008, PIMCO launched a global multiasset strategy billed as a complete solution in today’s “new normal” investment environment, according to company announcements at the time.
The strategy stands on three investment pillars: asset allocation, led by Mr. El-Erian; alpha strategies; and risk management. The portfolio has passive equity exposure backed by actively managed fixed income to obtain alpha, as well as exchange-traded funds and derivatives to gain certain market exposures.
Mark Porterfield, spokesman for PIMCO, said in an e-mail: “As a matter of policy, we don’t comment on rumours” concerning any possible lift-out. He added, however, that PIMCO does intend to expand investment activities into additional asset classes, including equities, as part of the company’s “multi-year evolution as a provider of global investment solutions.”