Big funds seen winning US bailout job

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Big funds seen winning US bailout job

Boston, October 7: : Credit Suisse analyst Craig Siegenthaler wrote in a note to clients last week.

Pacific Investment Management Co (PIMCO), a unit of German insurer Allianz, is another leading candidate for managing the bailout fund, analysts say.

PIMCO founder and Chief Investment Officer Bill Gross has long been considered the world's most influential bond investor. PIMCO has made no secret of its desire to be involved in the government fund and has said it would even manage it for free if others also do that.

PIMCO oversees more than $812 billion in assets.

Other managers and firms that might be picked include Jeffrey Gundlach, chief investment officer for Trust Company of the West, or TCW; Dan Fuss, chairman of Loomis Sayles; Tad Rivelle, Metropolitan West Asset Management; and Legg Mason's Western Asset Management bond unit, analysts say.

Smith of Fox-Pitt, Kelton also saw a role for alternative investment managers, such as private equity firm Blackstone Group and hedge fund firm Fortress Investments.

Analysts said that relative to the total assets that the firms manage, the earnings from overseeing the government fund would be small.

According to Smith, fees of five basis points on $250 billion deployed initially with the managers would earn annual revenue of $125 million and dropping fees to 1 basis point would yield just $25 million.

"When you have these humongous mandates, the fee structure is much lower than with the smaller mandates, especially if you got PIMCO out there telling you they'd work for free," he said.