“We’ll probably look back in hindsight and see plenty of folks made bad decisions,” Ryan said in an interview. “But that may be somebody else’s opportunity later on.”
Over the past decade, Pimco has raised more than $25 billion for a dozen private funds. Customers can buy stakes in some for as little as $100,000 through Artivest Holdings, an online platform that pools qualified investor accounts into private equity and hedge funds.
Higher Fees
Pimco began exploring the alternative debt market in 2007 under initiatives Ivascyn helped start as a mortgage portfolio manager. The private structure provides more control of loan covenant packages and investor protections compared with the public securities that comprise most of Pimco’s assets, Ivascyn said.
BRAVO III, which invests in real estate and other debt opportunities, is among the biggest of Pimco’s private funds, at $4.6 billion. It charges a hedge-fund-like 1.5 percent management fee plus 20 percent of returns while targeting a 14 percent to 16 percent return rate and requiring a seven-year commitment. By contrast, the Pimco Income Fund charges institutional clients 0.5 percent of assets while averaging 5.5 percent annualized returns over the past five years and offering daily liquidity.
In anticipation of launching more private funds, Pimco is beefing up its ranks of investing professionals, with an emphasis on specialists in credit and high-tech quantitative investing, according to Roman. Recent hires include John Studzinski, a former managing director at Blackstone, to manage relations with large clients such as sovereign wealth funds; Geoffrey Jones and Gabriel Goldstein, formerly with Tennenbaum Capital Partners, to focus on private and opportunistic credit; and Erin Browne from UBS Group AG in asset allocation.
Many of the recruits will also manage publicly traded funds.
“They’re not distinct or separate from the members of the team focusing on more traditional mandates,” Ivascyn said. “They’re highly complementary.”
This article was provided by Bloomberg News.