Pimco Global Opportunities Fund will buy securities and financial instruments “economically tied” to at least three countries, one of which may be the U.S., according to a registration statement filed today with the U.S. Securities and Exchange Commission. The fund will be able to purchase shares in companies of all sizes.
Chief Executive Officer Mohamed El-Erian this month hired Neel Kashkari, former head of the U.S. Treasury’s bank-rescue program, as well as Franklin Resources Inc.’s Anne Gudefin and Charles Lahr, to help the company expand the range of products it’s offering investors. Pimco Global Opportunity could position the Newport Beach, California-based company to reap the benefits of an investor shift from bond to stock funds.
“Pimco is a bond shop, but I think they have a view that bonds will under-perform stocks on a pretty regular basis in the future,” said A. Michael Lipper, the head of Lipper Advisory Services Inc., a Summit, New Jersey-based investment adviser. “Now they are hedging.”
Pimco, a unit of Munich-based insurer Allianz SE, had about $940 billion in assets under management as of Sept. 30. More than 90 percent of that was in bonds.
Team From Franklin
Today’s filing didn’t disclose who will manage the Pimco Global Opportunity Fund. A spokesman for Pimco couldn’t immediately be reached for comment.
Gudefin and Lahr had jointly managed the $15.6 billion Franklin Mutual Global Discovery Fund for San Mateo, California- based Franklin Resources. As of June 30, the Global Discovery fund had generated an average annual return of 7.6 percent since starting in January 2002, according to its semiannual report to shareholders.
Pimco Global Opportunities shares several features with the Franklin fund that Lahr and Gudefin ran, according to filings. Both funds list capital appreciation as their primary investment objective and both employ the Morgan Stanley Capital International World Index and the Standard & Poor’s 500 Index as benchmarks.
The Pimco fund will use a “bottom-up” investment style in which managers seek securities they consider undervalued, the firm said in the filing. Managers at Pimco will base their assessments on criteria such as asset value, book value, cash flow and earnings estimates, according to the document.
In addition to stocks, Pimco Global Opportunity can invest in U.S. and foreign government debt, bank loans and high-yield bonds, the filing said. It can also acquire securities of distressed companies and engage in short sales, a trading strategy that generates profits when stocks decline.
(from Bloomberg.com, December 30, 2009)