Sales Slump Pushes PIMCO from Top 25 in Europe

(March 3, 2014) — PIMCO, the world’s largest fixed income investor, slipped out of the top 25 in the European sales charts in 2013, after having held the number one slot in 2012, data has shown.

It is widely believed that fixed income has fallen out of favour with many large institutional investors over the last 12 months, due to equity market rallies and a sustained low interest environment. Despite this, Lipper said just shy of a net €100 billion flowed into the asset class over 2013 on the continent. Indeed the top two funds, in terms of inflows, were bond funds run by Franklin Templeton and Prudential/M&G, with a combined €12.2 billion in net sales.

Additionally, the second largest inflow across a wide range of asset classes poured into global currency-denominated bond funds, which received a net €26.8 billion across the year.

Two of PIMCO’s funds ranked in the top 25 for individual net sales, but investor outflows more generally meant the trillion-dollar investment house scored poorer net sales figures in Europe than some smaller bond firms. The company posted estimated group net sales of lower than €2.9 billion.

For more stories like this, sign up for the CIO Alert newsletter. 

In contrast, Babson, a US fund house with just five funds available to European investors, took in a net €3 billion over the 12 months.

Lipper cited poor performance, outflows, and management changes at PIMCO for investors to have so abruptly turned their backs on PIMCO. An additional blow may occur this year as former CEO and Co-CIO Mohammed El-Erian announced his departure in January.

Overall, the Lipper group sales chart was topped by BlackRock, with €32.5 billion in estimated net sales—a spot it has held for some time—but due to its predominant passive approach, the data monitor claimed JP Morgan Asset Management should be seen as the actively managed winner. The asset management arm of the investment banking giant brought in estimated net sales of more than €21.3 billion in 2013.

Overall, the top five groups active in Europe took almost half of all net sales in 2013. The remaining three were Franklin Templeton, Vanguard, and Prudential/M&G, which is also a leading bond fund manager in Europe.

PIMCO had not responded to requests for comment at the time of going to press.

For the full Lipper research, click here.

(March 3, 2014) — Japan’s Government Pension Investment Fund (GPIF) has agreed to a joint infrastructure venture with Development Bank of Japan (DBJ) and Ontario Municipal Employees Retirement System (OMERS).

Under the five-year co-investment agreement, the world’s largest pension fund with $1.3 trillion in assets, will invest up to $2.7 billion in infrastructure opportunities chosen through a “unit trust” with the DBJ. OMERS will source and propose potential investments to the trust.

According to GPIF’s press release, the unit trust will be managed by Nissay Asset Management Corporation (NAM) with Mercer Investments acting as an adviser.

GPIF is said to be particularly interested in opportunities in power generation, electricity transmission, gas pipeline, or railway, in developed countries in the hopes of generating “long-term and stable revenue from usage fees.”

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

“Investors with long-term horizons can benefit from stable income gains similar to fixed income in terms of cash flow profile, higher yields than those from typical fixed income [assets], and being less affected by public market volatility,” GPIF said in a statement.

Possible liquidity premiums and diversification benefits were also cited as reasons for entering into the co-investment.

Such a venture in infrastructure is in sync with investors’ growing interest in real assets, according to a recent study by BNY Mellon and Nobel-Prize winning economist Harry Markowitz.

The research found an 82 percentage point shift in sentiment towards real assets including infrastructure, project finance, etc. Endowments and foundations showed the largest commitment, with all of them said to be committing to the asset class soon. Some 88% of corporate pension plans and 86% of public pension funds also pledged future commitments.

Preqin’s most recent survey of unlisted infrastructure fund managers worldwide also showed 71% expected to deploy more capital in 2014 than in 2013.

The Japanese fund reported solid performance of a 4.73% return on investments in the third quarter of fiscal year 2013. It also gained ¥5.77 trillion in the same period in investment income, much higher than ¥3.24 trillion in the previous quarter.

OMERS earned $4 billion in investment income in 2013 from a 6.5% gross return. According to GPIF’s press release, the $65 billion Canadian fund earned an 11% rate of return on infrastructure investments from 2009 to 2013 on an annualized basis.