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Friday, May 15, 2015

The Third Big Pimco Equity Push Ends

News summary by MFWire's editors

Pimco's [profile] third big push into equities is about to end.

Yesterday news broke that Virginie Maisonneuve, chief investment officer for equities, is leaving the Newport Beach, California-based Allianz subsidiary late next month. Pimco also revealed plans to liquidate three equities mutual funds (with less than $1 billion in combined assets under management) this summer. And Pimco CEO Doug Hodge has no plans to replace Maisonneuve, either. Instead, Hodge will focus Pimco's smart beta products, powered by nearby Research Affiliates.

The news was covered by a host of publications, including: Bloomberg, the Financial Times, InvestmentNews, the LA Times, Reuters, and the Wall Street Journal.

Bloomberg notes that Pimco's first equity push ended in the 1980s when equity PMs quit ("after its bond traders overwhelmed" those equity PMs) and that Pimco's second equity push (in 1999) involved a separate unit that "ended in legal trouble after regulators accused it of allowing a hedge fund to engage in market timing," accusations that the unit settled (with the usual "without admitting or denying wrongdoing" caveat).

The third big equity push began in 2009 when Goldman alum and former TARP czar Neel Kashkari joined Pimco to build an equity business. He left in January 2013, and London-based Maisonneuve (who had been head of global and international equities at Schroders) filled Kashkari's shoes a year later. Pimco will still have some $3 billion in active equity funds (including a pair with about $900 million each), and it's total equity business (including the smart beta offerings powered by Rob Arnott's Research Affiliates) has about $50 billion in AUM, about three percent of Pimco's $1.6 trillion in total AUM.

"'Blip" is giving it too much credit for that business," Todd Rosenbluth, director of mutual fund and ETF research at S&P Capital IQ, reportedly said of Pimco's active equity efforts.

"We are evolving our approach to focus on areas that are more fully aligned with our capabilities and clients' needs," Hodge stated, clarifying that Maisonneuve will lead the pullback before she leaves.

Maisonneuve's exit follows the high-profile departures last year of Mohamed El-Erian (Hodge's predecessor as CEO) and Bill Gross (Pimco's star PM and co-founder).

Debra Taylor, a New Jersey advisor, told the WSJ that Pimco is "so much bigger than Mohamed [El-Erian], so much bigger than Bill [Gross]."

"If somebody is a Pimco believer, then this is not going to shake their belief or faith in Pimco," Taylor told the paper. 

Edited by: Neil Anderson, Managing Editor

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