Pimco's Gross tells clients 'we are a better team at this moment'

Wed Feb 5, 2014 12:11pm EST
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By Sam Forgione and Jennifer Ablan

NEW YORK (Reuters) - Pimco's Bill Gross, manager of the world's largest bond fund, reassured investors and clients on Wednesday that the departure of his heir apparent, Mohamed El-Erian, will not affect the performance of the firm.

"Believe me when I say, we are a better team at this moment than we were before," Gross, co-founder and co-chief investment officer at Pimco, said in his monthly letter. "I/we take the future challenge faced by all asset managers with close to a sacred trust." He advised readers to "stick with PIMCO."

Pimco shocked the investment industry last month when it said that El-Erian, chief executive and co-chief investment officer at the Newport Beach, California-based firm, would leave in mid-March, leaving Gross as the sole chief investment officer.

Last week, Pimco named Mark Kiesel, Virginie Maisonneuve, Scott Mather and Mihir Worah, currently managing directors at Pimco, as deputy chief investment officers. The four will join Dan Ivascyn and Andrew Balls, who were appointed to the roles the previous week.

The shakeup comes as many investors are turning their backs on the kind of bond funds Pimco is famous for offering.

The Pimco Total Return Fund, which has $237 billion in assets, extended last year's record net outflows in January, with investors pulling $3.5 billion from the fund over the month, Morningstar data showed on Tuesday.

"The evidence is very anecdotal, but there also appear to be at least some investors who are viewing Pimco's latest shakeup — including El-Erian's departure and the many other promotions, hirings, and departures that were just announced — as a major concern," Morningstar senior research analyst Eric Jacobson said.

"At least some portion of the January flows are likely a result of these folks trimming their holdings in Total Return."   Continued...

Pacific Investment Management (PIMCO) founder and co-chief investment officer Bill Gross plays golf on the first hole at Pebble Beach Golf Links before the start of the AT&T Pebble Beach Pro-Am in Pebble Beach, California, February 8, 2012. REUTERS/Robert Galbraith