Pacific Investment Management Co. is scaling back its investment in structured finance CDOs this year due to performance concerns. The move could be the "catalyst for concern in the entire market," said Steven Finnk, an analyst at United Capital Markets.

The Newport Beach, Calif.-based fixed-income manager, with $464 billion in assets under management as of March 31, has "really pulled back" from investing in the market in the last four-to-six months due to concerns about underlying collateral credit quality seen in the structured finance CDO "explosion" since the beginning of the year, said a source close to the company.

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