PIMCO's Ivascyn: It's Been a Challenging Year

Sep 25 2015 | 7:41pm ET

By Jennifer Ablan (Reuters) - Dan Ivascyn, who succeeded Bill Gross as Pimco's chief investment officer a year ago, said while he is pleased fund performance has improved, it has been "challenging" stabilizing one of the world's largest asset managers over the last 12 months.

"Pimco has had a more challenging year than most," Ivascyn said in a telephone interview. The Pimco Total Return Fund, which lost its title in April as the world's biggest bond mutual fund following two years of withdrawals, dipped below $100 billion in assets under management in August for the first time in more than eight years. Pimco's profit fell this year, raising the possibility that the firm may have to reduce costs.

Pacific Investment Management Co, which oversees $1.52 trillion as of June 30 with more than 2,400 employees, is a unit of German insurance group Allianz SE. Allianz's asset-management business - Pimco and smaller peer Allianz Global Investors - has been a drag on group earnings since last year's turbulent management reshuffle that culminated in the departure of Gross, co-founder of Pimco and known on Wall Street as the Bond King, on September 26.

As investors continued to pull their funds, Pimco's net asset outflows weakened Allianz's quarterly results, though the pace of outflows has slowed since the beginning of the year. The Pimco Income Fund, overseen by Ivascyn and viewed as the new flagship fund for Pimco, is nearing $50 billion in assets and outperforming 96 percent of its category peers year-to-date, according to Morningstar data.

Nonetheless, it is a long road back: In the second quarter, the asset management's contribution to the group's quarterly operating profit fell 25 percent to 505 million euros, down from 676 million euros. This follows a 14 percent decline in the first quarter.

Facing negative profit growth this year, analysts and investors who watch Pimco closely have speculated that cost-cutting could occur by year-end.

Michael Reid, spokesman for Pimco, said: "Pimco is evaluating areas of the business to align resources with the opportunities it sees."

Reid said the firm has hired more than 30 senior investment professionals over the last 12 to 18 months and earlier this year named former Fed Chairman Ben Bernanke as an advisor and hired Joachim Fels as its global economics advisor.

Reid said that "While the company does have natural staff attrition every year, reports of plans for broad layoffs are wrong."

Ivascyn said he is getting tremendous support from Allianz’s top brass.

“They have always been a very positive parent. They are more supportive today than ever before,” he said.


In Depth

Q&A: Biotech Investing with Crossover Fund RA Capital

Sep 15 2015 | 5:40pm ET

Boston-based RA Capital Management is an intriguing mix of sophisticated life sciences...

Lifestyle

Citadel Supports Manhattan Real Estate With Record Deal

Sep 16 2015 | 3:04pm ET

Never count hedge funds out of a big property deal. The Manhattan real estate market...

Guest Contributor

One Year, Three Lessons: What Launching A Liquid Alternatives Fund Taught Us

Sep 24 2015 | 1:53pm ET

One year ago this month, Larch Lane and Rothschild Asset Management formed the Rothschild...

 

Editor's Note