PIMCO officials previously had told Pensions & Investments the firm's management didn't believe in acquisitions because they felt merging two different money management firms would be too difficult and disruptive to the PIMCO culture, known for its hard-driving atmosphere and long workdays.
But Mr. Roman, who became Man Group CEO in 2013, expanded that firm's assets through the acquisition of smaller competitors including NewSmith Asset Management LLP, Numeric Investors LLC and Pine Grove Asset Management.
PIMCO officials have said the firm wants to expand its alternatives business.
The PIMCO source said while Mr. Roman's hiring doesn't necessarily mean PIMCO's culture of expanding through organic growth will change, it does signify PIMCO could now be open to an acquisition of an asset manager.
While Mr. Roman's merger and acquisition experience could be helpful if PIMCO were to look at acquiring another money management firm, the source said, that wasn't the reason for his hiring.
Morningstar France's Ms. Dobrescu said the replacement of Mr. Hodge “in itself was a surprise,” but noted the hire of Mr. Roman “is consistent with the business strategy PIMCO has focused on lately: it is committed to keeping a large (part of the business) in more conventional fixed-income offerings, but alternatives have also become a larger and larger part in recent years. In that respect, (Mr.) Roman's recruitment squares well with the strategy.”
While she said PIMCO “has been all but allergic to growth by acquisition,” Ms. Dobrescu added that because of the broader industry trend toward passive investment and specialized alternatives, and with traditional asset classes delivering lower returns, “it is not surprising to see PIMCO intensify its focus on the alternatives space.”
PIMCO had less than 10% of its assets in alternatives as of Dec. 31, according to P&I data.
She said firm executives have said Mr. Roman is a cultural fit, and his appointment does not signal a major change in business strategy nor a sole focus on alternatives. Rather, executives “want to improve investment performance, expand into non-traditional areas, but keep a large book in traditional fixed income,” said Ms. Dobrescu.
There are two areas that Morningstar analysts will keep an eye on: how Mr. Roman's experience of “growing a company through acquisition is reconciled with the culture at PIMCO,” and also the fact that Mr. Roman assumed the CEO position “despite the presence of Jay Jacobs,” PIMCO's president, Ms. Dobrescu said. She said Mr. Jacobs' ascent at the firm had suggested he would eventually become a CEO candidate, but noted he is said to have been part of the hiring committee.
Mr. Jacobs, who became president when Mr. Hodge was named CEO, has also seen his reporting line change. The structure now has Mr. Jacobs reporting directly to the CEO, rather than the executive committee. PIMCO executives “said they felt it was easier to attract top candidates by having a more traditional reporting structure with the president reporting to the CEO,” said Ms. Dobrescu. “It is clearly worth monitoring whether (Mr.) Jacobs remains sufficiently content to stay at the firm.” n