© 2019 SourceMedia. All rights reserved.

Pimco records highest profit since Gross’ departure

The turnaround at Pimco is nearing completion.

The bond manager owned by German insurer Allianz on Friday reported a fourth-quarter operating profit of $684 million, the highest since co-founder Bill Gross left the firm in the third quarter of 2014. His exit followed record redemptions from his Pimco Total Return Fund (PTTRX) and returns that trailed competitors.

Risk-retention requirements have had a “chilling effect” on the market for mortgage bonds that lack a government guarantee, Pimco said.
in Hong Kong, China, on Wednesday, Nov. 13, 2013. Hong Kong stocks fell, with the benchmark index paring last week’s gain, as Chinese developers declined amid concern the nation will introduce more measures to curb house prices. Photographer: Brent Lewin/Bloomberg

Pimco’s revival came in part because of group CEO Daniel Ivascyn’s reputation as a star trader, which has helped draw capital from around the world. The money management firm’s profit was driven by strong net inflows to its U.S. Income Fund as well as strategies including long duration and income.

Pimco’s performance was “spectacularly good,” according to Trevor Moss, an analyst at Berenberg in London. "It’s going to be a more challenging year for them in 2018 in many ways, but it’s macro-related more than company-related.”

Following Gross’ departure, Allianz in 2016 hired Jackie Hunt as head of asset management and recruited Emmanuel “Manny” Roman from Man Group to lead Pimco. The bond manager has hired more than 500 employees over the last two years, including 113 investment professionals, and plans to add 200 more people in the next year.

Pimco’s performance contributed to record third-party inflows last year at Allianz’s asset management unit, which also includes Allianz Global Investors, the insurer said.

Both long and short investments focused on volatility were mostly crushed lately.
February 14

Operating profit at the unit rose about 8% in the fourth quarter to $867.7 million from a year earlier, driven in part by strong performance fees at AGI. That’s the highest level in four years.

Pimco had about $15 billion of third-party inflows in January as retail and institutional investors in Asia and the U.S. allocated money to its funds, Allianz Chief Financial Officer Giulio Terzariol said on Friday.

Bloomberg News