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Friday, June 26, 2015

Where Stands Pimco Today?

Reported by Neil Anderson, Managing Editor

The new guard atop Pimco [profile] plans to listen more to their PMs, while sticking to the company culture they grew up with there.

Dan Ivascyn and Doug Hodge
photo credit: Jim Tweedie, Tweedie-Wyckoff Photography
CEO Doug Hodge and group chief investment officer Dan Ivascyn took the stage this morning at the 2015 Morningstar Investment Conference at Chicago's McCormick Place convention center. Jon Hale, Morningstar's director of manager research in North America, conducted a Q&A with the Pimco chiefs a year after their then-star Bill Gross famously spoke in sunglasses at the same conference. In Hale's words, Hodge and Ivascyn were there today to answer the question "Where stands Pimco today?"

Hodge joined Pimco 26 years ago after working as a bond trader at Solomon Brothers. Looking back, he described Pimco's culture as having three pieces: "so much mental horsepower," "client focus", and a "quiet confidence" in being performance oriented. Those three pieces, Hodge said, continues today, and Ivascyn agreed.

"There's this spirit about Pimco, this sense of promise," Hodge said. "The DNA of Pimco is rooted in this performance orientation."

Yet Ivascyn also hinted at changes in Pimco's culture post-Gross, at least on the PM side.

"We are going to try to listen a little bit more," Ivascyn said. "We're also going to try to critique our existing positioning more than we have in the past."

Hodge and Ivascyn also talked about the fallout of Gross' departure from Pimco in the fall.

"We have adapted to that change. We were ready when Bill decided to leave," Hodge said, pointing to a "comprehensive communications campaign" to clients and to a retention program for key talent. "Clearly we had a pivotal moment in our history. Bill Gross is an iconic investor."

"The team's functioning quite well," Ivascyn added, noting that Pimco now has more than 250 PMs around the world, up from about 25 when he joined the firm right out business school in 1998. "The dynamic's quite positive."

Hodge noted that Pimco now as $1.7 trillion in AUM, down from its March 2013 peak of $2.3 trillion. In the context of its parent, Hodge estimated that Pimco will represent 18 to 20 percent of Allianz's global income this year, up from just four percent when Allianz bought Pimco fifteen years ago.

Hodge and Ivascyn stuck around after the interview to answer questions from the audience of advisors. 

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