Seeking Independence, PIMCo Assumes Control of Fund Sales From Parent Company

(January 18, 2011) — The Pacific Investment Management Co. (PIMCo), the largest US investment manger owned by an insurer or bank, is taking control of fund sales from parent Allianz SE following the bond manager’s sixfold surge, Bloomberg reported.

“The big issue is, as PIMCo has grown, is the tail wagging the dog?” Jeffrey Hopson, an analyst with Stifel Nicolaus & Co. in St. Louis, said in a telephone interview with the news service. “They’ve set up their own equity business, and now it looks like they’re trying to control their own destiny.”

PIMCo plans to open a brokerage for its mutual funds in New York, taking on 170 people from its parent company, which bought the investment manager in 2000. The news service additionally spoke with Jon Short, PIMCos investments chairman and managing director who has been selected to run the new New York-based unit. Short confirmed that PIMCo will hire roughly 80 more people for the distribution unit, bringing the total number of people in the distribution arm to 250. The move toward PIMCO’s greater independence is now awaiting regulatory approval.

PIMCo manages $1.2 billion in investments, largely bonds, for insurers, pensions, and other investors. Its move, according to the company, is aimed at better aligning brokers with PIMCo’s research and reducing costs for investors. The firm has grown under the direction of Mohamed El-Erian and Bill Gross to $1.2 trillion from $200 billion, when it was acquired by Allianz in 2000.