Pimco’s Gross tries again to soothe clients

Tue Feb 18, 2014 2:49pm EST
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By Jennifer Ablan

(Reuters) - Pimco's Bill Gross, manager of the world's largest bond fund, on Tuesday sought to reassure the firm's clients about the new leadership structure he has put in place since his heir apparent stunned the investment community last month by announcing his departure.

Gross called the collection of six new deputy chief investment officers a "significant improvement" from Pimco's previous structure, which concentrated nearly all investment strategy decision making onto the shoulders of Gross and Pimco Chief Executive Mohamed El-Erian.

El-Erian, who shared the chief investment officer title with Gross and long had been seen as his successor, will leave the Newport Beach, California-based firm in mid-March.

In the wake of El-Erian's announcement by Pimco in January, the investment firm has named Dan Ivascyn, Andrew Balls, Mark Kiesel, Virginie Maisonneuve, Scott Mather and Mihir Worah as deputy chief investment officers.

In a letter posted on Pimco's website, Gross said: "We will take turns chairing our daily meetings, which will allow for greater focus on certain sectors and regions. I also find that I often prefer to sit at the side of the table rather than at the head of it. I can contribute more effectively that way, learn more by listening, and it gives others the opportunity to lead."

Pimco observers considered the letter, which marked the second time Gross has publicly addressed the new management structure this month, as a response to clients who have grown edgy about the unexpected changes and Pimco's recent investment calls. Pimco's flagship Total Return Fund PTTRX.O posted nine straight months of net outflows and notched its first negative return in 14 years in 2013.

"I think Pimco did this because they were caught totally off guard by Mohamed leaving," Morningstar senior research analyst Eric Jacobson said. "My impression is that they've been getting tremendous blowback from their clients, and now they are responding publicly."

Gross cited the depth of expertise across a broad array of assets and global regions of his deputy CIOs, even pointing out that Ivascyn was named Morningstar's Fixed Income Fund Manager of the Year for 2013 and Kiesel in 2012.   Continued...

Pacific Investment Management (PIMCO) founder 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