Several of the biggest investors in Allianz are pressing the German insurer to step up oversight of its California asset management unit Pimco and one is considering the unusual step of going public with its concerns at a shareholder meeting in May.
Reuters contacted the 10 top investors in Allianz as well as smaller shareholders to gauge their views on Pimco, the bond powerhouse whose reputation has been tarnished by a run of poor returns and the departure of CEO Mohamed El-Erian amid a row with co-founder Bill Gross.
Six of the biggest shareholders declined to comment ahead of the Allianz annual general meeting (AGM), scheduled for May 7. One expressed confidence that the German firm was addressing the management and performance issues at Pimco.
However, three other top shareholders were more critical, saying Allianz still needed to persuade them that the problems at Newport Beach-based Pimco were under control.
Specifically, they said they wanted the Munich-based firm to rethink the management structure that was put in place at Pimco after El-Erian’s departure. The new configuration has six deputy chief investment officers (CIOs) under Gross. They also want assurances on Gross? pay and a detailed long-term plan on how Pimco plans to broaden its focus beyond fixed income.
Allianz, which has said little publicly about Pimco’s performance or the internal disagreements at the fund manager, declined to comment.
Douglas Hodge, who replaced El-Erian as chief executive of Pimco, said on Thursday that the California group has spoken to ?literally thousands? of its clients and that the vast majority are comfortable with the new structure.
Over the last five years, Pimco points out, it has launched over 150 new investment funds across multiple platforms including private equity, hedge funds and active equities asset classes.
The critics say the developments of the past months suggest Gross has been given too much freedom. Investors pulled $3.1 billion from Pimco’s flagship Total Return fund in March, the 11th straight month of outflows from the world’s largest bond fund, and its performance on the month lagged 95% of its peers, fund data firm Morningstar said this week.
According to Reuters data, the top 10 investors are: Blackrock Asset Management, Credit Suisse Asset Management, Norges Bank, Harris Associates, Northern Cross, Blackrock Institutional Trust, The Vanguard Group, Deutsche Asset and Wealth Management, Allianz Global Investors Europe and Union Investment.
