Pimco’s Bold Strategy to Tackle an Impending Avalanche in Asset Management

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Markets are too bullish, says Pimco’s Ivascyn

Bonds are back, as virtually every investment house is telling their clients in the rush of mid-year prospects. But this is not necessarily a smooth process.

By giant bond pimcothe good news is that, as chief investment officer Daniele Ivascin told my colleagues Mary McDougall AND Katie Martinflows have “substantially improved” this year after a scorching 2022 in which it experienced heavy outflows each quarter, amounting to 75 billion euros across the company for the full year.

Morning Star the data show the AllianzThe California-owned fund manager has had fixed income inflows every month this year as investors hang on to higher yields as part of a broader rush into fixed-income assets.

But Oliviero Baetechief investment officer of Allianz, he said Bloomberg that Pimco’s flows were “still shaky” as investors weigh the outlook for interest rates.

Ivascyn said in an interview with the Financial Times that even for investors who don’t think central banks will be able to bring inflation back to target, fixed income offers the best value we’ve seen for “many many years.” Real inflation-adjusted yields in the US are at levels not seen since the global financial crisis.

Warning that the market may be too bullish on the prospect of a “soft landing” by central banks, Pimco is loading up on high-quality government and corporate bonds for now, avoiding areas that will be most vulnerable in a downturn.

But Ivascyn is waiting for the companies’ credit ratings to be downgraded, which it expects will result in vehicle fire-sales as secured loan obligations. This heralds the time to do business.

He says:

“A great trade will be to take advantage of the violent repricing in public markets and then wait for private markets to adjust over the next few years and then pivot in what should be a really interesting opportunity.”

Read the full interview Here

Silver Lake focuses on ‘all-in bets’

Silver Lake is focusing its investments on “big all-in betsas one of Wall Street’s most-watched investors ramps up the ambition of his trading operations amid expectations that more volatile markets will unearth big opportunities.

Egon Durbanco-chief executive, said the $98 billion technology-focused private equity group would focus on smaller but bigger investments, such as the $12.5 billion acquisition of the software company Qualtrics which closed last Wednesday.

“If you see us investing right now, by definition it’s going to be a big all-in bet,” Durban told my colleague Antonio Gara in a rare interview “You will see us do . . . a handful or two of really important big investments a year and that’s it.

Durban’s comments contrast with many of Silver Lake’s top private equity rivals, which are focusing on smaller deals after rising interest rates led to a sharp slowdown in trading activity. But he said tightening financial conditions have provided opportunities to back tech companies that were previously out of reach for private equity buyers.

“Our greatest successes as an institution have been when we’re big in terms of capital and committed corporate resources,” he said. Silver Lake’s 2.4 billion euro move to take over Software AGone of the largest technology companies in Europe, made headway this month after a rival bidder withdrew its commitment.

Silver Lake first invested more than $500 million in Qualtrics, which invented specialized software analytics tools that help businesses respond to customers online, during the technology group’s 2021 initial public offering. Qualtrics soared to give the company a valuation of nearly $30 billion in the months following its flotation, but fell by about two-thirds last year.

This gave the acquisition group the opportunity to pull together an acquisition having already held a large public stake and representation on Qualtrics’ board. Durban had also approached the founder and president of Qualtrics Ryan Smith and its chief executive officer Zig Seraphimwho will continue to lead the company.

Chart of the week

The UK has lost on a global stock market rally so far in 2023 as the Bank of EnglandThe rush to raise interest rates and the drop in oil prices are holding back the FTSE 100.

The major London benchmark has lagged other major developed market indices, up less than 0.5% from where it finished 2022 as of Thursday’s close, after falling 2% this quarter , he writes George Steer in London. The latest setback for a market that has long been out of favor with investors at home and abroad has dashed hopes that last year’s relative resilience heralded the start of a longer period of recovery for the FTS extension.

Packed with oil majors and other valuable cash-generating stocks, but lacking major tech groups likely to benefit from the recent AI hype, the UK represents a relatively tough sell, analysts say. Meanwhile, relatively turbulent politics and particularly stubborn inflation act as further deterrents for international investors.

Weak oil prices, rising rates and doubts about the BoE’s ability to curb inflation all contributed to the FTSE “putting on such a mundane show,” he says Russian moldinvestment director at AJ Bell. “There’s not a lot of tech or AI fuss to have,” she said.

Five must-see stories this week

Odey Asset Management asked investors to support a renovation of one of its oldest funds as part of larger efforts to extract its founder, Crispino Ody, by the company in the wake of allegations of serial sexual misconduct. Meanwhile his star fund manager James Hanbury is in “advanced talks” to move its portfolio to a boutique consultancy Investment Management Lancaster.

Advisors to the largest private equity firms in the world they are warning New merger notification rules proposed by US antitrust agencies threaten to disproportionately affect serial traders and significantly delay getting deals over the line.

The 90 billion pounds University Pension Scheme (USS), one of the largest investors in Thames waterhe gave its support for utility while other industry figures tried to avert any possible nationalization of the industry.

A Work the government would try to unlock at least £10bn a year of extra money from banks and insurance companies to invest in UK clean energy industry, shadow city minister Siddiq tulip he revealed.

The city minister and the head of the London Stock Exchange have counter to pension funds over their complaints that proposed changes to make the UK more attractive to public companies would water down investor protections.

And finally

From politics, economics and history to art, food and, of course, fiction: FT writers and critics choose their favorite reads of the year so far.