Pacific Investment Management Co., the bond manager that started expanding into stocks four years ago, hired Virginie Maisonneuve from Schroders Plc (SDR) to lead the push after Neel Kashkari left in January.
Maisonneuve, who was head of global and international stocks at Europe’s biggest publicly traded fund company, will start in January in Pimco’s London office, according to a statement today from Newport Beach, California-based Pimco. Maisonneuve, 49, managed stock funds in Schroders’s London office for nine years, overseeing strategies such as Schroder International Alpha Fund. (SCIEX)
Michael Diekmann, chief executive officer of Pimco parent Allianz SE, said earlier this month that the bond manager’s expansion into stocks was proving more difficult than expected. Pimco, seeking to expand into stocks in anticipation of an end to the three-decade bond rally, has gathered less than 1 percent of the firm’s $1.97 trillion in assets into its four main stock funds.
“Virginie is a proven equity investor and leader who has delivered a track record of success for clients throughout her 25-year career as a portfolio manager and a business builder,” Mohamed El-Erian, Pimco’s chief executive officer and co-chief investment officer along with co-founder Bill Gross, said in the statement.
El-Erian and Gross, whose name is synonymous with fixed-income investing, have sought to expand beyond fixed income to stocks, alternative products such as hedge funds and exchange-traded funds. Unlike rivals such as BlackRock Inc., which made acquisitions to move beyond bonds, Pimco chose to grow by adding managers and strategies one at a time. By hiring Maisonneuve, Pimco is hoping to reinvigorate its stock push just as investors are fleeing the bond market, removing an estimated $128 billion from fixed-income mutual funds since May.
“Pimco is disproportionately exposed to fixed-income investments and in 2013, as investors gravitate to U.S. equity mutual funds, it’s important for them to try to keep more of those assets in-house,” said Todd Rosenbluth, director of mutual-fund research for S&P Capital IQ. “Her U.S. fund has been good for investors in bullish markets and negative for them in down or bearish markets like in 2011.”
The $199 million Schroder International Alpha Fund, which Maisonneuve has managed since 2005, returned an annualized 15 percent in the past five years, ahead of 70 percent of rival funds, and 23 percent in the past 12 months, behind 65 percent of peers, according to data compiled by Bloomberg. In 2011, when the MSCI EAFE Index declined 12 percent, including reinvested dividends, the fund lost 17 percent. In 2009, the fund surged 47 percent as the MSCI EAFE returned 33 percent.
In a 2012 interview, Kashkari said the firm’s equity funds were seeking to deliver strong performance over the next three years to five years, and would give up some upside to protect investors when markets declined. Maisonneuve joins a year after the departure of Kashkari, who was hired in 2009 to oversee the unit’s expansion after earlier attempts to add stocks fizzled. Kashkari, who didn’t manage any funds, stepped down saying he wanted to pursue a career in public service.
In Maisonneuve’s $1 billion Global Equity Alpha strategy, which is domiciled in Luxembourg, performance has struggled over the last three years because it has a growth orientation, said Oliver Kettlewell, a London-based fund analyst for research firm Morningstar Inc. The fund should have performed better in 2012 and this year given the increase in global markets, Kettlewell said.
In the past five years, the Global Equity Alpha fund returned an annualized 14 percent, ahead of 68 percent of peers, and over the past three years it’s returned 7.3 percent, behind 64 percent of rivals, according to data compiled by Bloomberg. This year, the fund is up 20 percent, ahead of 65 percent of similarly managed funds.
Maisonneuve also co-managed the $21 billion Vanguard International Growth Fund since 2005, alongside managers including M&G Investments and Baillie Gifford, according to Vanguard Group Inc.’s website. The fund returned an annualized 16 percent over the past five years, ahead of 59 percent of peers.
Maisonneuve, who will be a managing director, global head of equities and portfolio manager, joins the six female managing directors at Pimco out of 57 executives with that title, according to the firm’s website. They include Jennifer Bridwell, global head of alternative product development; Sabrina Callin, who oversees Pimco’s enhanced equity index and unconstrained bond products; Wendy Cupps, head of product management; and Jennifer Durham, chief compliance officer.
The equity unit’s mutual funds account for about $3.8 billion of Pimco’s assets. Stock strategies including Pimco’s StocksPLUS funds, which attempt to beat the market using a combination of bonds and derivatives, total more than $50 billion, according to today’s statement.
The returns at the stock mutual funds have been mixed. Pimco’s first stock fund, the $2.2 billion EqS Pathfinder (PATHX), which opened in April 2010, returned 7.9 percent over the past three years, behind 52 percent of rivals, and 19 percent over the past year, behind 83 percent of peers, according to data compiled by Bloomberg.
The firm’s $455 million EqS Emerging Markets Fund (PEQWX) returned 8.4 percent in the past year to beat 57 percent of rivals, and its $569 million EqS Long/Short Fund is up 28 percent, ahead of 77 percent of similarly managed funds, according to data compiled by Bloomberg.
The $649 million EqS Dividend Fund, whose co-manager Cliff Remily departed earlier this month, advanced 19 percent, behind 84 percent of peers, the data show.
Kashkari joined Pimco after acting as senior adviser to former U.S. Treasury Secretary Henry Paulson and also had a career as an investment banker at Goldman Sachs Group Inc. Before Schroders, Maisonneuve worked at Clay Finlay in New York as co-chief investment officer and at State Street Research & Management as a stock manager focused on Asian portfolios.
‘Given her previous experience running global, European, Asian and North American stocks, she’s got the right background to run a global mandate at Pimco,’’ Morningstar’s Kettlewell said. “She’s definitely independent minded and strong willed, and has her own views on the market.”
Pimco is diversifying as Gross’s Pimco Total Return Fund is on track to have the worst redemptions ever this year. The world’s biggest bond fund lost almost $30 billion through Sept. 30, according to estimates from Morningstar in Chicago. Pimco’s U.S. mutual funds had four straight months of withdrawals starting in June, totaling $39 billion. This year through Sept. 30, the funds had $8.9 billion in net redemptions, Morningstar said.
Diekmann said in an Oct. 15 interview that given Pimco’s size and significance on the bond side, the amount it’s attracted into stock funds is less significant.
“It’s obviously more difficult than we expected it to be, but I’m very happy that they do this in a professional way, and not getting into sort of acquisition mode,” Diekmann said. “I don’t declare victory yet, but neither do I say it’s been a failure.”
Maisonneuve began her career working with the French Ministry of Foreign Affairs in China. She has a master’s degree in Mandarin Chinese from Dauphine University in Paris, an MBA from Ecole Superieure Libre des Sciences Commerciales Appliquees in Paris and a degree in political economics from People’s University in Beijing, according to the statement.
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