Bond giant Pimco will launch actively managed stock funds, and hires Kashkari
Bond fund titan Pimco is jumping the fence -- into the stock-picking business.
The Newport Beach firm, perhaps the world’s best-known bond investor, today said it would expand into actively managed stock funds.
The firm also said it had hired Neel Kashkari, who headed the U.S. Treasury’s bank bailout program until departing in May and dropping out of sight to a cabin in the Northern California woods. Kashkari, a former Goldman Sachs & Co. executive, will become Pimco’s head of “new investment initiatives.”
In a letter to clients, Pimco Chief Executive Mohamed El-Erian and the firm’s bond guru, Bill Gross, said the decision to launch actively managed stock funds was a natural step in Pimco’s evolution.
The company over the last decade has branched beyond bonds into passively managed (“index”) stock funds, commodity-related funds and asset-allocation funds. Still, the vast majority of the $940 billion in assets that Pimco manages is in fixed-income securities.
Adding actively managed stock funds would give Pimco a bigger arsenal to compete against rival BlackRock Inc., which manages $3.2 trillion across a broad spectrum of stock, bond and other investment funds.
“Extending Pimco’s investment activities into active equities and thus across the capital structure is a logical and natural extension of the firm’s successful investment process,” Gross said in a statement.
Pimco said it hired two stock fund managers from the Franklin Templeton funds to get the stock-fund business going: Anne Gudefin and Chuck Lahr, who were co-managers of the Franklin Mutual Global Discovery fund.
The two will “focus on establishing and managing global equity investment strategies based on a ‘deep value’ style approach,” Pimco said.
As for the 36-year-old Kashkari, El-Erian and Gross said in their client letter that they expected him to lead the firm’s entry into active-stock-fund management “and other new businesses over time.”
For Kashkari, the new job also will be a return to civilization: Last spring, he and his wife fled to a cabin near the Truckee River, to “detox” from his Washington experience, as the Washington Post reported on Sunday.
-- Tom Petruno
Photo: Neel Kashkari. Credit: Haraz N. Ghanbari / Associated Press