Pimco sees massive surge of inflows in third quarter

Pacific Investment Management Co. LLC, the Allianz SE fund unit overseen by Mohamed El-Erian and Bill Gross, took in more money than any other asset management firm during the third quarter, with more than $56 billion in deposits.
NOV 14, 2010
Pacific Investment Management Co. LLC, the Allianz SE fund unit overseen by Mohamed El-Erian and Bill Gross, took in more money than any other asset management firm during the third quarter, with more than $56 billion in deposits. Allianz, Europe's biggest insurer, said last week that Pimco's third-quarter operating profit rose 44% from a year earlier to $593 million. Pimco, with about $1.2 trillion in assets, accounts for almost the entire fixed-income business at Allianz. Pimco, best known for the bond funds it has run since 1974, has attracted money as investors flock to top-performing fixed-income managers in the wake of stock market swings and the global financial crisis. BlackRock Inc., the world's biggest asset manager, last month said that it drew $15.6 billion in deposits. Pimco's pace of deposits may be hard to sustain if investor preferences change, said Oliver Baete, Allianz's chief financial officer. “I think we had more net inflows into Pimco than we had flows in the U.S. equity asset management industry in all of this year,” Mr. Baete said during a conference call. “It's due to the huge success of our friends at Pimco that have just relentlessly focused on performance, now obviously having a lot of support from the market as interest rates are at the lowest point that I can imagine.” Mr. Gross' $256 billion Pimco Total Return Fund (PTTAX), the world's biggest mutual fund, averaged gains of 8.9% over the past five years, beating 98% of rivals, according to data compiled by Bloomberg. The portion of Allianz bond assets outperforming rivals rose to 91% as of Sept. 30, from 79% a year earlier, the firm said. Allianz reported fixed-income deposits of $173.6 billion for the 12-month period ended Sept. 30. Its third-quarter deposits climbed 19% from a year earlier. Mr. Baete said that investors may turn away from fixed-income funds and move to equities if interest rates increase from the near-zero levels of the past two years. Under Mr. El-Erian, Pimco's chief executive, the firm last year began a push to diversify beyond its mainstay of bonds. The firm has hired portfolio managers from Franklin Resources Inc. and The Goldman Sachs Group Inc.'s asset management unit to open global equity funds.

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