Does a proven expertise in fixed-income investing translate into an expertise in stock investing? Well, that's what one of the biggest names in bond investing is hoping. Pacific Investment Management, better known as Pimco, is said to be considering a move into stock funds. But would a Pimco equity fund be a smart buy, or something to avoid?

Expanding its reach
Part of me views Pimco's motivation behind moving into equities as a cynical grab for assets. The firm is already the world's largest fixed-income manager and isn't likely to continue growing as quickly on that front. However, equity management is a huge, untapped reservoir of potential growth and profits for Pimco. And while investors seem to be having a love affair with bonds right now, eventually, after fear of the current financial crisis fades, stocks are likely to become an investor favorite once again.

Certainly from a strategic angle, expanding to offer an array of stock funds would be a boon to Pimco, which is owned by Munich-based insurer Allianz (NYSE:AZ). Such a move would help Pimco better compete with other asset managers like BlackRock (NYSE:BLK), which recently agreed to acquire the Global Investors unit of Barclays (NYSE:BCS). But plenty of lesser investment shops have been undone by attempting to reach beyond their core competencies.

Lifting out the competition
If Pimco were to simply carve out an equity division from its current managerial line-up, I'd be wary of putting too much, ahem, stock in their stock funds. After all, Pimco doesn't have a track record or any meaningful expertise in equity investing.

But word is that Pimco might be taking a smarter route to expanding its offerings -- by lifting out an entire equity management team from another fund shop. This would be a shrewd way to expand its offerings, allowing Pimco to get around the lack of manager tenure and lack of public track record that many new mutual funds face. And several companies have been putting their asset-management divisions on the block lately, with Ameriprise Financial (NYSE:AMP) recently having agreed to buy the Columbia fund unit from Bank of America (NYSE:BAC) for $1.2 billion.

And the odds are good that in this environment, Pimco would be able to snap up a well-respected equity team fairly easily. After the recent market drop, a number of asset management firms are smarting from the loss in assets and struggling to rebuild. Layoffs have been widespread in the investment world, with big-name firms like Legg Mason (NYSE:LM), Franklin Resources (NYSE:BEN), and T. Rowe Price all cutting staff this year. The time could be ripe for a sharp-eyed competitor like Pimco.

Keeping it consistent
So, what's the bottom line on a potential stock fund line-up from Pimco? Well, it's a bit too early to know for sure. As I've said before, a mutual fund is only as good as its manager, so the relative attractiveness of any potential Pimco stock funds will depend on which managers eventually join the Pimco team. If Pimco succeeds in acquiring a knowledgeable equity team with a solid track record to run its newly minted stock funds, then those funds might be worth a look.

Of course, that all assumes that Pimco won't be making meaningful changes to the investment team or to its approach once bringing it on board. If Pimco does, then that would negate the whole point of lifting out an intact team -- if the investment process, management, or incentives change meaningfully, then investors can't necessarily count on the same kind of performance results in the future.

One good rule of thumb to consider is that if you wouldn't buy any of the funds run by the as-yet-unspecified equity team right now, you shouldn't buy them from Pimco, either. Having the Pimco name slapped on the funds won't make them any better, although that will no doubt be good enough for some less-discerning folks. Time will tell whether Pimco's move into stocks will be a smart, strategic effort or merely an overly ambitious power grab. Pimco has the tools to do it right, so let's hope that the company executes as well as it has in the past.

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Amanda Kish is the Fool's resident fund advisor for the Rule Your Retirement investment newsletter. At the time of publication, she did not own any of the funds or companies mentioned herein. The Fool owns shares of Legg Mason, which is a former Motley Fool Inside Value pick. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.