Germany’s Allianz has reported €34bn in net outflows as its Pimco fund arm was hit by withdrawals in the second quarter amid the bond market sell-off.
The Munich-based company said on Friday that investors pulled €29bn from its California-based credit manager Pimco in the three months to the end of June.
Analysts at Citi said in a note that Pimco’s outflows were “significantly higher than expected”.
Investors are closely watching the fortunes of Pimco, the world’s largest credit-focused manager, as the 30-year bond market boom runs out of steam.
Allianz, which focuses on insurance and asset management, reported operating profit of €3.5bn, just ahead of analysts’ expectations. Net income fell slightly behind forecasts due to a decline in the group’s investments. Allianz’s share price was down 2 per cent in early trading on Friday.
Chief executive Oliver Bäte said the group’s profits and balance sheet had “proved resilient against heightened volatility and a fundamentally weaker economic environment”.
The group’s property and casualty division posted strong results owing to a lower bill from natural catastrophe claims and rising commercial insurance prices. This helped offset the asset management division’s weaker performance.
Pimco and its peers are trying to navigate an environment where the highest level of inflation in a generation is eroding the value of their bond holdings. The bond market sell-off also reflects concerns about the impact of Russia’s war in Ukraine on global economies.
A pioneer in active bond trading, Pimco is also having to contend with the expansion of cheap index-tracking funds, run by the likes of BlackRock and Vanguard, which have led some investors to question the fees they pay to active managers.
Pimco’s chief executive Emmanuel Roman and chief investment officer Daniel Ivascyn have shifted into alternative strategies to diversify the fund manager. These include direct lending, aircraft leasing, real estate and pop song catalogues.
Allianz’s overall third-party assets under management fell €109bn during the quarter to €1.8tn, as a result of market and currency movements, and investor withdrawals.
The company made no further provision for the €6bn settlement it agreed with US authorities earlier this year over a scandal at its US funds business. This involved a securities fraud that left investors nursing billions of dollars worth of losses.
Net income attributable to shareholders for the first six months of the year halved as a result of the settlement, to €2.3bn.
Analysts at Jefferies described the results as a “modest, albeit low quality” profit beat, but noted the fall in assets under management, and the lower life and health earnings.