Magazine article American Banker

Pioneer, an Equity Specialist, Puts Accent on Bond Business

Magazine article American Banker

Pioneer, an Equity Specialist, Puts Accent on Bond Business

Article excerpt

Pioneer Group Inc. is expanding its bond fund business through a combination of building and buying.

Last week the Boston-based mutual fund company announced it had hired Margaret D. Patel, a veteran high-yield bond fund manager, from Third Avenue Funds, a New York-based investment firm.

And it has a preliminary agreement to take over the Third Avenue High Yield Fund, which Ms. Patel manages. The acquisition would become final in 90 to 120 days, a Pioneer spokeswoman said. Until then Pioneer will subadvise the $8.8 million fund for its current owner.

The developments come four months after Pioneer quietly rolled out a strategic income fund.

Pioneer plans to develop offshore versions of certain bond funds, but perhaps the biggest challenge for the company is to get its 27 wholesalers and the brokers who sell its funds to start thinking of the company as a provider of fixed-income products.

"For 71 years we've been 'the equity shop,' " said David Tripple, president of Pioneer Investment Management Inc.

Indeed, that traditional emphasis on stock funds has led to problems in the past. During the tumultuous third quarter, assets fell by $3.5 billion, leaving it with $20 billion of assets under management.

That was partly because Pioneer had about $20 of equity assets under management for every $1 of bond assets far higher than many of the company's rivals -- and stocks got hit hard.

In fact, the gap has widened, to about $24 of equities for every $1 in fixed income. …

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