Investors pull $30 billion out of Pimco as inflation fears bite

Investors pull $30 billion out of Pimco as inflation fears bite

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Investors pulled 29 billion euros ($29.6 billion) from bond giant Pimco in the second quarter, its parent Allianz SE

said on Friday, highlighting nervousness in the fixed income sector as inflation rages and central banks hike interest rates.

Revealing its results, the German insurance group said overall third-party assets under management dipped by 109bn euros in the three months to the end of June, reflecting market shifts, currency movements and client withdrawals.

But the outflows at subsidiary Pimco, the second quarter in a row of significant withdrawals, took the eye of analysts, with Citi calling them “significantly higher than expected”.

Assets under management at Pimco have shrunk from 1.510 trillion euros at the end of 2021 to 1.386 trillion by the end of June 2022, a reduction that Allianz said reflected “overarching market trends”.

Source: Allianz

Actively managed bond funds such as Pimco, which is led by Emmanuel Roman, have been struggling in recent months as surging inflation has made fixed-income less attractive and the proliferation of cheaper index-tracking funds has enticed investors.

Sharp moves in bond prices of late, as the market has strived to pinpoint peak inflation and the likely pace of central bank monetary tightening, have added to investor uncertainty.

The MOVE index, a gauge of U.S. Treasury volatility, is off recent record levels but at 120.6 remains well above its long-term average of about 60.

However, Allianz chief financial officer Giulio Terzariol belives that more monetary policy certainty will encourage investors to return. Once the interest rate situation “is going to stabilize, all those outflows are going to become inflows,” he said in an interview on Bloomberg Television.

Allianz reported operating profits of 3.5 billion euros for the second quarter, a touch above analysts forecasts.

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