A key architect of the compulsory retirement savings system lauds its many achievements, stretching from the national economy to the individual. Where it’s double faulting is in serving members – and it needs to be addressed promptly.
With performance and diversification driving demand, these funds are expected to experience four-fold global growth over the next decade to nearly $AU65 trillion.
PIMCO’s new lease of life with own retail distribution
(Pictured: Adrian Stewart)
by Greg Bright
PIMCO will be rolling out several new fixed income strategies to the retail market, following its decision announced last week to insource retail distribution back from Equity Trustees (EQT), its long-time partner. The world’s biggest bond manager has also strengthened its institutional distribution team.
Adrian Stewart, Australian country head, said that PIMCO was in the process of obtaining a retail license, to replace that held by EQT, and would have 13 new staff for retail distribution. These would be split into two teams: a traditional business development team and a new “investment due diligence” team, which will be engaged in research and consist of highly technical people who can readily articulate the range of strategies, he said.
“The distribution model has evolved and we’re in the fortunate position to be able to build the most contemporary model. Advisors don’t buy like they used to. In many cases they are not necessarily able to [make discretionary decisions]. Dealer groups have sophisticated research teams, so we will be hiring senior people with a lot of investment knowledge.”
Stewart added that there had been a lot of talk in the industry in the past two-three years about “content marketing”. He had “grossly underestimated the depth and breadth” of PIMCO’s content. “We’ll be investing in the marketing team, too, to deliver that content so that it’s relevant and meaningful.”
Melissa Reeves, the head of marketing and corporate communications in Australia, is being promoted to a regional APAC role, including Japan, operating from Hong Kong in October. She is currently looking for a new Sydney-based person to replace herself.
On the institutional side, PIMCO has recently hired two senior people and now has a team of five client-facing executives and three support staff.
The likely new strategies to be made available by PIMCO are:
> a multi-strategy fund with daily liquidity
> a new income strategy
> a global hybrids fund, and
> possibly taking the flagship Australian bond fund to the international market.
PIMCO is also looking to develop its extensive research into the retirement products market and capitalize on its ownership by the global insurance giant Allianz.
“There aren’t too many groups in the world with our capabilities,” Stewart said. “We’ve been talking to Allianz both here and in Europe, and also looking at the initiatives in the US. I can see quite a bright future there.”
The new trusts will be “owned” by PIMCO, unlike the existing retail products under the EQT banner. EQT remains the responsible entity for the existing trusts. PIMCO and EQT share a custodian, State Street.
In fact PIMCO first looked to insource both distribution and RE about five years ago when it did a review of its custody arrangements. A consultant, David Lugton, reviewed the market but in the event the firm decided to keep the status quo arrangements until late last year, when Stewart, who joined from Macquarie in August, undertook a review of all operations.
