Pimco, the fixed income specialist owned by German insurer Allianz, beat US rivals BlackRock and Western Asset Management to win the award for global fixed income for the second year running.

With $641bn (€504bn) in global assets under management, the manager believes size contributes to its success. Pimco has seen assets quadruple since the start of 2000, and its focus on global fixed income accounts for more than 60% of the asset growth at Allianz during that period. Pimco has also been one of the biggest beneficiaries of the move by European institutions from balanced management towards specialists. Ten years ago the bond market was chiefly concerned with government bonds and currencies. But according to Joe McDevitt, managing director and head of Pimco's London office, success today is a matter of scale and resources. "Scale is a big advantage in fixed income because you need a lot of resources to add value. You need to be able to do well in all the investment grade sectors and also to have strong emerging markets, derivatives and high-yield capabilities. These are all critical if you are going to implement the full toolkit of investment ideas." Pimco focuses on diversification within the bond portfolio, creating a mix of uncorrelated assets, which over time should achieve a better performance in relation to the risk taken on. McDevitt said Pimco's global capability had helped this year when the firm was too early anticipating a housing-led slowdown in the US economy. "Performance over the past 12 months in global and US portfolios has been positive but might have been better if we had had that US yield curve view right. "It goes to show the importance of diversified position-taking. Because of the global opportunity set we have been able to make money from other ideas," he said. Paul Cavalier, investment consultant at Mercer Investment Consulting, said global fixed income markets had been dominated by the potential end to monetary policy tightening in the US that started in June 2004. He said: "The weakness in the US housing market seemed to be the catalyst for many market participants to expect a slowdown in economic activity which would feed through into the global economy. "In the US bond market, continued monetary tightening in the first half led to higher yields across the curve, while expectations that the Fed was near the end of its tightening bias pushed yields lower from early summer." In Europe, Pimco has won 19 institutional mandates this year and 34 institutional fund clients. McDevitt pointed to strong growth in European and UK bond mandates. He said clients had been attracted by Pimco's ability to find ideas outside local markets. Significant wins this year have included a £260m (€387m) segregated liability-driven bond mandate from the Xerox UK pension scheme. It was benchmarked against a combination of swaps and index-linked bonds to better match the risk characteristics of the liabilities compared with market capitalisation-weighted indices. More than $128bn of Pimco's assets are managed and serviced out of its London and Munich offices, which is up $13bn from the end of last year. McDevitt said the London office had enjoyed particularly strong growth, with locally managed assets up 44% to $28bn, and total assets up 27% to $61bn to the end of September. While Pimco operates on a large scale, its model employs a relatively small group of portfolio managers with a larger group of account managers responsible for client relationships. In December it hired Joachim Suter, previously director of client relationship management and business development at UBS Global Asset Management, as head of institutional business development for Switzerland. It has also created a new position, head of Middle East region business development, promoting Suhail Dada internally to lead its institutional business in the Gulf.