Pimco Is Getting Its Act Together After Bill Gross Exit
(Bloomberg Gadfly) -- "Pimco turned around" -- so Allianz SE claims in Friday's annual results. It certainly seems that way.
In the final three months of last year, Pacific Investment Management Co., the fixed-income fund manager owned by Allianz, delivered its best quarterly operating profit since the end of 2014, when bond guru Bill Gross quit the firm he founded.
Pimco's U.S. Income Fund was responsible for about 22 percent of 2017's total net inflows to the firm of about 144 billion euros ($180 billion). Moreover, growth is accelerating. The fourth quarter saw a net 43 billion euros of inflows, while a further $15 billion was added in January this year alone, Allianz's Chief Financial Officer Giulio Terzariol said in a Bloomberg Television interview.
Importantly, Pimco was able to attract funds without sacrificing fee income, though it still operates with a skinnier margin than Allianz's Global Investors unit is able to command in Europe.
As with the rest of the fund management industry, costs remain a focus. Allianz drove down the overall cost-income ratio in its asset management division to 60.2 percent in the fourth quarter from 61.2 percent in the year-earlier period.
The German giant is in the market for acquisitions in the asset management industry "that might add to the capabilities we have," Terzariol said. After turning Pimco around, Chief Investment Officer Daniel Ivascyn may well find himself with a bigger train set to play with.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Mark Gilbert is a Bloomberg Gadfly columnist covering asset management. He previously was a Bloomberg View columnist, and prior to that the London bureau chief for Bloomberg News. He is the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”
©2018 Bloomberg L.P.