Pacific Investment Management Co. said that it was closing funds under two of its main stock investment strategies and that its equities investment chief was leaving, a sign that its push for growth in the crowded field of stock mutual funds had hit a wall.
The Newport Beach investment giant said Virginie Maisonneuve, its chief investment officer for global equities, would leave the firm at the end of June after overseeing the liquidation of the funds associated with its emerging markets and value-based strategies.
Maisonneuve declined to comment through a Pimco spokesman.
The abrupt closing of a major portion of its stock investing operation shows the difficulties facing Pimco as it tries to recover from the exit last fall of its former star bond manager, Bill Gross. The surrounding turmoil has triggered staggering investor redemptions of more than $170 billion across all of Pimco's bond and stock funds in the 12 months that ended March 30, according to Chicago research firm Morningstar Inc.
Pimco is known mainly for expertise in bonds, which make up the overwhelming majority of its $1.59 trillion in assets under management. Its push into stocks began with great fanfare during a period of rapid growth in 2009 and included the hiring of Neel Kashkari, a former Goldman Sachs executive and the assistant Treasury secretary in charge of the $700-billion Troubled Asset Relief Program, to run it.
But few fields in finance are more competitive than stock mutual funds, with more than 4,500 pure stock funds competing for investor dollars, according to the Investment Company Institute. Performance across Pimco's stock portfolio was mixed, Kashkari left after three years and the equities effort never caught on with the public. It amounted to a few billion dollars, a tiny sliver of Pimco's business.
Morningstar analyst Russ Kinnel said Pimco's equities effort was ambitious, given the intense competition, and its management record was mixed at best. One problem, he said, was the firm's emphasis on cautious value investing that missed much of the gains of a bull market.
"There was definitely some arrogance there," he said. "They had some good ideas, but also some dopey ideas."
With Pimco's assets falling rapidly and the equity portfolio failing to make headway, the stock mutual fund operation was a logical candidate for cost cutting, Kinnel said.
Douglas Hodge, Pimco's chief executive, said in a statement, "We are evolving our approach to focus on areas that are more fully aligned with our capabilities and clients' needs."
Pimco will still manage stocks, mostly through funds that invest in dividend-paying stocks and in long-short strategies, as well as through products that blend stocks and bonds and index-like products. In one form or another, the company now manages about $50 billion in stocks. In January, Pimco said it was expanding a partnership with Research Affiliates, an investment strategies firm that uses a blend of passive and active investment styles.