Saturday 18 November 2017

Pimco's new chiefs seek to calm investors after Gross exit

Co-founder Bill Gross left Pimco in a surprise departure
Co-founder Bill Gross left Pimco in a surprise departure

Mary Childs

The world's biggest bond fund house has moved to calm investors after the surprise departure of co-founder and former chief investment officer Bill Gross.

Pimco said there will be no major changes in investment strategy. The company was initially focused on trading following the announcement that Mr Gross, widely considered the most influential bond manager, was leaving for Janus Capital Group, the firm's chief executive Douglas Hodge said in an interview.

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 $222bn (€175bn) Pimco Total Return Fund.

"We've all been part of the team as members of the investment committee."

The departure of Mr Gross (70) triggered a sell-off in the markets he favours, including US treasuries, credit derivative indexes and the Mexican peso, before Pimco announced late that day that Daniel Ivascyn will replace Gross as chief investment officer.

The firm, which manages almost $2 trillion in client assets, may see withdrawals of as much as 30pc, according to one report.

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. Gross and El-Erian 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 Mr Ivascyn as group CIO, he said.

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, one source said.

After Ivascyn was introduced, the group cheered and gave him a standing ovation. The new management will keep the existing structure with annual forum and cyclical forums, investment committee meetings and regional portfolio committee meetings, all of which are "working very well", Mr Ivascyn said.

Irish Independent

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