NEWPORT BEACH, Calif.— PIMCO, the self-named "authority on bonds," is making a major push into the large-cap core equity market.
As a key point, officials at Pacific Investment Management Co., Newport Beach, are trumpeting the Stocks-
PLUS Total Return strategy to institutional investors seeking souped-up alternatives to large-cap core equity mandates. The large-cap blend fund offers investors reduced volatility, a low-to-negative correlation and consistent returns over three- and five-year time horizons, according to Sabrina Callin, product manager. The strategy, which passed its three-year mark in June, had $1.2 billion in assets as of June 30. That's double what it had 12 months earlier.
StocksPLUS Total Return is an active equity management strategy that takes on more risk than the firm's 19-year-old StocksPLUS and invests across the yield spectrum. It combines a non-leveraged position in index futures with a low- to intermediate-duration fixed-income portfolio, typically between one and six years.
Large-cap core equity managers are taking the potential competition by the bond behemoth in stride. William Jacques, chief investment officer at Martingale Asset Management LP, Boston, which runs about $1.2 billion in large-cap core, said competition has been increasing overall because investors' search criteria is changing.
"We have been involved in searches recently where (the client said they are) looking for alpha and then applying it to the large-cap sector of the U.S. market, instead of saying they are looking for large-cap equity managers," Mr. Jacques said.
"There's no such thing as anyone's turf anymore," he added. "Everyone is trying to add value, and exactly what you add the value against can really be done independently."