Pimco reassures investors after CIO departure
Pacific Investment Management Co, seeking to calm investors after the surprise departure of co-founder and former chief investment officer Bill Gross, said there will be no major changes in investment strategy at the manager of the world's biggest bond fund.
Pacific Investment Management Co, seeking to calm investors after the surprise departure of co-founder and former chief investment officer Bill Gross, said there will be no major changes in investment strategy at the manager of the world's biggest bond fund.
Pimco was initially focused on trading following last Friday's announcement that Gross, widely considered the most influential bond manager, was leaving for Janus Capital Group, Pimco chief executive Douglas Hodge said. The firm has since started reaching out to clients and distribution partners around the world in a bid to prevent large-scale redemptions.
"It's business as usual," said Scott Mather, one of three newly appointed managers of the US$222 billion Pimco Total Return Fund. "We've all been part of the team as members of the investment committee."
The departure of Gross, 70, triggered a sell-off in the markets he favours, including US Treasuries, credit derivative indices and the Mexican peso, before Pimco announced late that day that Daniel Ivascyn, 45, will replace Gross as chief investment officer. The firm, which manages almost US$2 trillion in client assets, may see withdrawals of as much as 30 per cent, according to a report by Sanford C Bernstein.
Gross's exit set into motion a succession protocol, put in place after the resignation in January of former chief executive Mohamed El-Erian, according to Hodge. The two had clashed over management issues and Gross's leadership style, people familiar with the matter said at the time.
Pimco's managing directors met and "by basically overwhelmingly unanimous consent" confirmed Ivascyn as group CIO, he said. Pimco named Mather, Mark Kiesel, and Mihir Worah to take over management of Pimco Total Return.
Pimco's leadership team convened a meeting with more than 300 employees present or video-conferenced in who deal directly with clients, walking them through the process of appointing the new management, according to a person who was present and asked not to be identified.