Pimco renames some equity funds in push to juice expansion

Bond shop's efforts to move into stock funds through collaboration with Rob Arnott's Research Affiliates has been slow

Mar 26, 2015 @ 5:26 pm

By Bloomberg News

Pacific Investment Management Co., the firm best known for bonds that's been seeking to expand its stock offerings, will rename some of its equity funds as it plans to open new products with Robert Arnott's Research Affiliates.

Pimco is renaming 14 stock funds that it calls “smart beta” strategies, or those that seek to beat traditional indexes that are weighted by market capitalization. The modified names will take effect April 15, the Newport Beach, Calif.- based firm said in a statement.

The firm is trying to expand its non-traditional equity offerings through its collaboration with Mr. Arnott's firm as its active stock-picking strategies have been slow to attract investor money. In January, Pimco said it would add seven additional equity strategies with Research Affiliates, covering big and small stocks from the U.S. and worldwide, including emerging markets.

Pimco's active stock funds, started as part of a push more than five years ago, accounted for less than 1% of Pimco's assets of $1.68 trillion as of Dec. 31. Bill Gross, Pimco's co-founder, left the firm last year in part after disagreements over whether and how to diversify.

(More: BlackRock adds fuel to smart beta debate in push for exotic bond strategies)

Mr. Arnott debuted what his firm calls “fundamental indexing,” which shuns the standard way of picking index components based on market capitalization in favor of company fundamentals. Research Affiliates has licensed the use of its proprietary indexes to companies including Atlanta-based Invesco Ltd.

Many Pimco funds that are to be renamed will include Research Affiliates' initials. They include the Pimco Fundamental IndexPLUS AR Fund, which will now be called Pimco RAE Fundamental PLUS Fund; and the Pimco Fundamental Advantage Absolute Return Strategy Fund, which will become the Pimco RAE Fundamental Advantage PLUS Fund.


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