Daniel Ivascyn, Pimco's group chief investment officer, is about to go head to head with Bill Gross in the fastest-growing segment of fixed income: unconstrained funds.
Ivascyn, who was named Pimco's investment chief on September 26 after his old boss abruptly quit, was also appointed as one of the three portfolio managers on the $21.6bn (€17bn) Pimco Unconstrained Bond Fund. Gross will run a start-up unconstrained fund for his new employer, Denver-based Janus Capital Group.
The Unconstrained fund - which has the flexibility to invest in all types of bond securities globally and often invests in credit rather than interest-rate sensitive assets - is an important product for California-based Pimco. Its investors have been withdrawing assets from the company's traditional offerings, such as Pimco Total Return, the world's largest bond fund, in anticipation of rising interest rates.
The company is counting on Mr Ivascyn to revive the Unconstrained fund, which Bill Gross took over last December after the fund trailed peers over the past five years. The firm, which manages $2trn, has lost ground to competitors such as BlackRock and Goldman Sachs, which have attracted new money into such strategies amid a surge of demand from investors.
"What I hope to do is maybe bring a new perspective that we've utilised in the income strategy and even some of the hedge-fund strategies over to the unconstrained bond strategy," said Ivascyn, who also manages the $38bn Pimco Income Fund.
Bill Gross didn't respond to phone calls seeking comment. Shares of Allianz SE, Pimco's owner, rose 1.4pc to €129.95 yesterday, after falling sharply on Friday.