PIMCO is planning to build active equity management capability, possibly by lifting an existing team from a rival firm, according to sources familiar with the company.
For a money manager so entrenched in bonds, the move is likely to cause a stir not only within Pacific Investment Management Co. LLC, Newport Beach, Calif., but also at Munich-based parent Allianz Global Investors, a multi-boutique money manager with existing active equity capability.
Since returning to PIMCO from Harvard Management Co. in 2007, Mohamed El-Erian — the California manager's CEO and co-chief investment officer — has been working on providing more integrated products across asset classes. Active equity will be a crucial part of that business strategy, according to consultants.
“Just as the right answer to an investment portfolio is exposure to lots of different asset classes, an asset manager's revenue stream — as a firm — is more stable if it's spread across different asset classes,” said Alasdair Macdonald, senior investment consultant at Watson Wyatt Worldwide, Reigate, England, referring to the asset management sector in general.
Likely liftout candidates are global equity teams with a strong track record, but whose company may have been financially weakened by the economic downturn, sources said. PIMCO executives might consider those skilled in long-short equity or quantitative strategies, and not just in long-only equities.
Among the possible targets: certain active equity teams at UBS Global Asset Management, where equity strategies are beginning to outperform those of its peers. (UBS itself hired an international growth equity team in 2007 from Nicholas-Applegate Capital Management LLC, an active equity unit of Allianz Global based in San Diego.)
Other possibilities include teams from Morgan Stanley Investment Management, Evergreen Investments and Colonial First State Global Asset Management, according to consultants and executive recruiters.
Officials at UBS Global AM, MSIM and Evergreen declined to comment while Colonial First State spokeswoman Caroline Regidor did not respond to a request for comment by press time.