Pimco fund flow reversal gives new boss Roman pillar to build on

By Simon Jessop and Carolyn Cohn

LONDON (Reuters) - Pacific Investment Management Co's new boss Manny Roman, who joined last week from British hedge fund firm Man Group (EMG.L), has a steadier platform to rebuild it from after the California-based firm finally stemmed an outflow of client money.

Pimco, the bond-focused arm of Germany's Allianz (ALVG.DE), said on Friday it had taken in more investor money than had been withdrawn from its funds for the first quarter in more than three years during which it lost billions in assets to rivals and cut around 3 percent of its staff..

Much of these outflows followed the high-profile and acrimonious departure of founder Bill Gross in 2014, with a $200 million lawsuit still going on in the U.S. courts.

Net new money to Pimco totalled 4.7 billion euros (£4.03 billion) for the three months to the end of September, Allianz said in its own forecast-beating results.

Pimco looks likely to show a positive second half of the year, after October also saw net inflows, Allianz chief financial officer Dieter Wemmer told a media call.

Combined with investment gains the net new money helped Pimco's total third-party assets under management rise 1 percent to just over 1 trillion euros (£857.53 billion), more than offsetting adverse currency moves.

Globally, mutual fund assets under management had risen 6.9 percent in the year to end-September, data from Lipper showed, with most of the money - $410 billion - heading into bond funds.

Pimco's Investment Grade Credit and Global strategies both took in fresh money, as did its Income strategy, which includes the flagship Pimco Income Fund.

Overseen by Group Chief Investment Officer Dan Ivascyn, the fund saw strong inflows in September, which helped take its total assets to $66 billion, Morningstar data last month showed.

The results come just two days after the election of a new U.S. president, whose economic policies some expect to lead to higher inflation, sparking the biggest weekly jump in the U.S. 30-year Treasury bond yield for 7 years on Thursday.

That taste of market volatility follows a warning from Pimco in its Cyclical Outlook report in late September that many assets appeared "fully priced" and vulnerable.

Allianz Chief Executive Oliver Baete said in March he aimed to make Pimco an "area of focus" in 2016, and with the appointment of Roman, the firm is expected to expand into offering more alternative investments.

It is also expected to work more closely with its equity-focused sibling Allianz Global Investors, Allianz's new asset management chief Jackie Hunt said in July.

Pimco said it had also seen a 30 million euro quarter-on-quarter increase in the performance fees earned from its funds, while the average margin earned was stable at 38.7 basis points.

That in turn helped drive operating profit in the three months up 19 percent from the second quarter, it added.

(Editing by Alexander Smith)