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INTERVIEW - Allianz plans to boost PIMCO with new hires

MONACO (Reuters) - Allianz Global Investors, the funds arm of German insurer AllianzALVG.DE, plans to add about 100 staff this year, with bond manager PIMCO the biggest beneficiary as investor appetite for fixed income products continues.

AGI Chief Executive Joachim Faber said the head count had increased across the entire group by 100 people last year and he expected to repeat that this year.

“The PIMCO business is growing very strongly so it has had the most people added,” said Faber in an interview on the sideline of the annual Fund Forum in Monaco.

He said the growth was not due to the firm’s push into equity products but rather related to the continued high demand for fixed income and PIMCO’s development of unconstrained and absolute return type products.

Investors have shunned equity products to a certain extent this year despite the stock market rally as the outlook for the economic recovery remains uncertain.

Instead, they have flocked to fixed income investments, prompting asset managers to up staff in areas of credit suddenly in demand, such as high yield, and to enhance their specialist expertise in emerging market debt.

PIMCO runs the $228 billion Total Return Fund, the world’s biggest bond fund. At the end of March, it had a total $1.070 trillion under management.

Faber said in 2009 the group as a whole had net inflows of some 90 billion euros and was seeing similar flows this year. AGI had total assets under management of about 1.2 trillion euros at the end of 2009.

AGI is targeting new assets in Asia and is awaiting regulatory approval to distribute funds in India through its joint venture with the financial services arm of the Indian Bajaj Group.

Faber told Reuters in March he had hoped the joint venture would be up and running by the end of the year but said on Thursday the company was still waiting for approval.

“It is quite unpredictable so it is difficult to say when we will launch now -- it could well be 2011,” he said.

He said the venture planned to sell Indian equity and bond funds.

The Indian market has proved vexing for asset managers operating there as the regulator, SEBI, surprised the industry last year by abolishing front-end fees to cut costs for investors and discourage aggressive selling.

Because the unit-linked insurance product market has been unaffected by these changes, many distributors have switched to selling these commission-bearing products instead.

“This unresolved situation is giving us a lot to think about because it looks like the measures introduced for the mutual fund market won’t be adopted for unit-linked products,” said Faber.

(Editing by Karen Foster)

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