Trying to Capitalize on Bond Management Success, Pimco to Create Equity Fund Unit

On the heels of an especially strong year for its bond mutual funds, Pimco Advisors Holdings announced plans Tuesday to create a new equity fund unit.

The unit, Pimco Equity Advisors, is expected to expand Pimco’s presence in the faster-growing and more profitable retail stock fund marketplace, analysts say.

It is designed to capitalize on the money management giant’s improved brand identity, which is largely based on its bond fund management.

Last year, the Newport Beach- based firm was sixth among all mutual fund companies in attracting new investments, according to Financial Research Corp., a consulting firm in Boston.

And Pimco’s Total Return fund, a bond portfolio managed by Bill Gross, was the second best-selling fund in the nation, behind Vanguard Index 500.

“Pimco has been very successful recently, but that’s been largely influenced by the success of Bill Gross,” said Geoff Bobroff, an independent industry consultant in East Greenwich, R.I. “Now that they’ve been so successful in promoting Bill Gross, this may be a true cross-selling opportunity for other investment products.”

Noted William Cvengros, Pimco’s chief executive: “We want to leverage our brand.”

The new unit will specialize in “growth-oriented” retail equity funds, Cvengros said. Growth funds have been among the most popular and successful equity funds in the recent bull market.

Until recently, Pimco’s growth funds had been managed by one of its subsidiaries, Columbus Circle Investors. The struggling unit will now go back to focusing on institutional clients, company officials said.

Pimco Equity Advisors will be headed by Ken Corba, chief investment officer for Eagle Asset Management, Pimco officials announced.

The unit will initially be responsible for three funds currently sub-advised by Columbus Circle--Pimco Growth, Pimco Target and Pimco Innovation--with $4 billion in assets under management.

But eventually, “we see the unit as a platform for adding other types of equity funds, like sector funds,” Cvengros said.

Pimco has $225 billion in assets under management, about a third of which are in retail products such as mutual funds and variable annuities. Company officials hope that will soon grow to at least 50%.

“It’s fairly safe to say that in the mutual fund industry, the retail and equity segments are growing somewhat faster than institutional and fixed-income lines,” said Merrill Lynch analyst Mark Constant in San Francisco.

Pimco shares closed Tuesday at $30.94, unchanged, on the New York Stock Exchange.