With Pimco's Gross out, Allianz tries to reassure investors

Mon Sep 29, 2014 5:40pm EDT
 
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By Kathrin Jones and Jennifer Ablan

FRANKFURT/NEW YORK (Reuters) - Top executives of Pimco and its German parent, Allianz SE, scrambled on Monday to stem the outflow of money after the stunning exit of star bond manager Bill Gross last week, but even after months of internal strife Allianz said it plans to let Pimco continue to steer its own ship.

DoubleLine Capital, an investment firm that has been a major rival of Pimco, reported that it had its second biggest net inflow day ever on Friday, the day of Gross's surprise departure.

On Monday, the chief executive of Pacific Investment Management Co., Doug Hodge, and its newly installed chief investment officer, Dan Ivascyn, who stepped into the post with Gross' resignation on Friday, held calls with financial advisers from both Morgan Stanley and Merrill Lynch to try to stem the flow of client assets.

Los Angeles-based DoubleLine Capital took in between $400 million and $500 million in net inflows on Friday alone, Chief Executive Jeffrey Gundlach told Reuters. Investors continued shifting money to DoubleLine at a hectic pace on Monday, another source at the firm said.

Frankfurt-based insurer Allianz said it remains fully committed to Pimco but does not plan to step up its oversight of the Newport Beach, California-based operation it acquired about 15 years ago, even after Gross' departure to join far-smaller rival Janus Capital Group capped months of turmoil.

Before the 70-year-old Gross left Pimco, the firm was managing nearly $2 trillion of assets. Its flagship bond fund, the Pimco Total Return Fund, the world's largest fixed-income portfolio, long run by Gross personally, accounted for more than $220 billion alone.

On a conference call, top Allianz and Pimco executives tried their best to play down the departure of Gross, who has been dubbed the "Bond King" for his prowess in the fixed-income market. For the first time they also gave specifics about a long-simmering rift with Gross, saying there had been differences over the strategic direction of Pimco, which had prompted Gross to leave.

But despite the upheaval, which started eight months ago with the abrupt resignation of Pimco CEO Mohamed El-Erian following a row with Gross, Allianz gave no indication that it would exert greater control over the firm, as some investors have demanded.   Continued...

 
The logo of Europe's biggest insurer Allianz SE is pictured at their headquarters in Unterfoehring, near Munich February 26, 2014. REUTERS/Michaela Rehle