Wednesday 17 January 2018

Markets rocked as US 'bond king' Bill Gross quits Pimco

Bill Gross has been clashing with Pimco's executive committee and had threatened to quit multiple times, a source said
Bill Gross has been clashing with Pimco's executive committee and had threatened to quit multiple times, a source said

Paritosh Bansal and Jennifer Ablan

Bond markets fell yesterday after Bill Gross, one of the market's most renowned investors, resigned from Pimco, the huge investment firm he co-founded more than 40 years ago, to join Janus Capital Group, a distant rival in the asset management arena.

The departure comes within days of news that US securities regulators were investigating Pimco and Mr Gross in connection with an exchange-traded fund he managed at the firm.

The departure is not related to the probe, a source familiar with the matter told Reuters.

The surprise development, which rattled the US bond market, came the day before Pimco and its parent, German insurer Allianz SE, planned to dismiss Gross, according to a source familiar with the matter.

Gross, who had been Pimco's chief investment officer, had been clashing with the firm's executive committee and had threatened to quit multiple times, the source said. The committee had planned to accept his latest resignation on Saturday.

"Pimco and Bill Gross are synonymous," said Todd Rosenbluth, director of mutual fund research at S&P Capital IQ. "It will be extremely hard to think of Pimco and Bill Gross as separate, and it will take time for investors to realise that he no longer is going to play a role at one of the world's largest fixed income managers."

The departure is the latest twist in a tumultuous year for Gross, long dubbed "the bond king" for his prowess in fixed-income investing, and for the investment firm he helped build into a $2 trillion powerhouse since co-founding it in 1971.

Earlier this year, his co-chief investment officer, Mohamed El-Erian, left Pimco, sparking a highly public falling out between the two long-time colleagues.

Moreover, Gross's flagship Pimco Total Return Fund, the world's largest bond fund with more than $220bn in assets, has suffered nearly $70bn of investor withdrawals over the past 16 months, while its performance has lagged its peers and the wider bond market.

The news hit the US Treasury bond market, sending yields higher and bond prices lower. Shares of Allianz fell more than 6pc in German trading. Janus shares rocketed more than 30pc higher.

Gross's move was seen as a huge coup for Janus, which has less than $180bn in assets under management, less than the Total Return Fund and a fraction of Pimco's total assets.

Richard Weil spent 15 years at Pimco before taking over as chief executive officer of Janus in 2010. Gross will manage the Janus Global Unconstrained Bond Fund beginning on Monday, the firm said in a statement. The fund has just $13m in assets. (Reuters)

Irish Independent

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