The European head of Pacific Investment Management Co. said the region’s pension crisis has created a strong rate of growth there for the Newport Beach-based bond fund manager, the world’s largest.
Joseph McDevitt, head of Pimco Europe, told reporters last week at the London-based ICBI Fund Forum 2005 in Monaco that revenue from outside the U.S. is expected to grow at three times the rate of larger, more mature bond fund operations in the U.S.
McDevitt made his remarks to reporters at the International Centre For Business Information conference.
Pimco, a unit of German insurer Allianz AG, has grabbed a slice of Europe’s once heavily regulated pensions investing market, particularly in London and Munich, McDevitt said.
Roughly 15% to 20% of the Pimco’s operating profit in Europe comes from London and Munich, McDevitt said.
Driving the growth: companies and others offering pensions are looking to match future retirement payouts with investment returns.
“In the last two to three years, the UK market has totally changed,” Reuters quoted McDevitt. “Pension funds are struggling with 80% to 85% funding of their liabilities,if they’re lucky. They want more out of their bond holdings. So we’ve seen big demand for core plus returns out of the UK funds,it’s one of our fastest growing areas.”
Last month, Britain’s Pension Protection Fund, a government safety net for private pensions, tapped Pimco to manage a bond fund. In April, the Devonport Royal Dockyard pension appointed Pimco to manage its $185 million portfolio.
Europe has been a big target for Pimco, which has $485 billion in assets under management and another $200 billion that it manages for Allianz.
Assets under management in Pimco’s Euro Bond Fund now stand at $2 billion, up 300% percent since 2003, McDevitt said.
Pimco’s Global Investors Series umbrella funds have $11 billion in assets, nearly double the size of two years ago, he said.
Last week, Pimco debuted its Diversified Income Fund, which targets pensions looking to boost returns. The fund invests in bonds by companies and emerging countries.
