Should Bond Powerhouse Pimco Jump into Stocks?

News reports from Bloomberg and Pensions & Investments say that fixed-income giant Pacific Investment Management Co. is considering a move into equity investing. Pimco may hire an existing management team with a track record, according to unidentified sources. But this isn’t exactly new news: In September, Kiplinger’s ran a profile of Pimco, in which Pimco’s bond guru Bill Gross as well as Pimco CEO Mohamed El-Erian talk about potential expansion into equities.

Pimco Total Return, Pimco’s flagship fund, is the biggest mutual fund of all, with more than $186 billion in assets. So why would Pimco, arguably the most powerful of all fixed-income shops, branch out into stocks? And why should you care? I posed these and other questions to Russ Kinnel, director of research at Morningstar, the Chicago fundtracker. Here are his thoughts.