NEW YORK (Reuters) - Pimco on Wednesday promoted another four of its top investment managers into more strategic roles, expanding the pool of potential successors to the fund management firm’s co-founder and star bond picker Bill Gross following the sudden resignation of his previous heir apparent.
Mark Kiesel, Virginie Maisonneuve, Scott Mather and Mihir Worah, currently managing directors at Pacific Investment Management Co, will become deputy chief investment officers, Pimco said in a statement.
The four will join Dan Ivascyn and Andrew Balls, who were appointed last week after Mohamed El-Erian, who is the chief executive officer and who shares the chief investment officer role with Gross, abruptly announced plans to resign from Pimco, the world’s largest bond fund manager.
The ongoing shakeup comes as many investors are turning their backs on the kind of bond investments Pimco is famous for offering. In fact, last April Gross went so far as to declare the three-decade bull run for bonds to be over.
Reflecting that, several of the new appointments have expertise outside of the fixed-income sector, which has long been Pimco’s bread-and-butter business. Maisonneuve, for instance, recently joined Pimco in January to succeed Neel Kashkari as the Newport Beach, California-based firm’s global head of equities.
“Our six deputy CIOs demonstrate the strength, depth and breadth of investment talent at Pimco,” Gross, 69, said in a statement. “Individually and as a team they have delivered for clients consistently, and they will now help lead Pimco’s investing excellence into the future.”
El-Erian, who had been widely seen as the heir apparent to Gross, will leave the firm in mid-March. Gross, who shared the title of co-chief investment officer, will become the sole CIO. El-Erian will remain a consultant at Allianz (ALVG.DE), the German insurer that owns Pimco.
Allianz granted Pimco in 2011 full control of its global distribution of its products - a move that had given the world’s largest bond fund more independence as it expanded into new businesses.
The reorganization had given Pimco more independence from its corporate parent as it expanded into equities and other asset classes as well as products - a move that El-Erian then told Reuters was “another step in Pimco’s ongoing evolution as the complete provider of global investment solutions for our clients around the world.”
Pacific Investment Management Co had $1.92 trillion in assets as of December 31, according to the firm’s website.
BOND KING’s SUCCESSOR STILL SEEN IN DOUBT
Even though Allianz’s PIMCO quickly appointed Douglas Hodge as chief executive officer last week plus six new deputy CIOs to replace El-Erian, analysts and investors agree that none are real contenders for Gross’ job right now.
A CEO selection committee comprised of senior Pimco managing directors appointed Hodge as chief executive officer. The appointment of deputy CIOs was likewise made by Pimco, according to a Pimco spokesperson.
“I think that it is very clearly an effort on Bill Gross and Pimco’s part to reassure clients, in particular, that not only have they worked on succession planning in the past but that there are real people identified in that process to take over if necessary,” said Morningstar senior research analyst Eric Jacobson.
He added: “I just don’t see any single heir apparent at this point. I do think it remains an open question whether any of these folks are in a position to truly challenge Bill Gross’s investment ideas and macro thinking.”
The management overhaul comes against the backdrop of a rough 2013: Customers withdrew $41.1 billion from Pimco’s flagship Total Return Fund last year, a record amount for the $2 trillion manager, according to investment research firm Morningstar.
Pimco also said that managing directors Charles Lahr and Marc Seidner will leave, while Sudi Mariappa will re-join as a managing director and generalist portfolio manager.
Mariappa will return to Pimco from GLG where he has served since 2012 co-managing that firm’s absolute return fixed income offering. He was previously at Pimco from 2000-2011 as a managing director, portfolio manager and senior adviser.
Interviewed on CNBC, Gross said about El-Erian: “We’re disappointed that he won’t be with Pimco, that he didn’t continue with the successor role for me as chief investment officer - but that is the way it is and we’re going to move forward.”
This past weekend, Pimco replaced the ubiquitous photo of Gross and El-Erian on its Twitter stream, which has attracted over 164,000 followers, with the firm’s logo.
Reporting by Jennifer Ablan; Editing by Rosalind Russell and Lisa Shumaker