El-Erian Surprised by Manner of Gross’s Exit From PimcoDevin Banerjee
Mohamed El-Erian, who quit Pacific Investment Management Co. in January amid reports of clashes with Bill Gross, said he was surprised by the events surrounding the departure of the star bond manager last week.
“His departure -- the fact that it happened and how it happened -- was a surprise,” El-Erian, 56, said today in an interview with Betty Liu on Bloomberg Television. “What was not a surprise was the bench and a strong team led by Dan Ivascyn. They are superb,” said the former chief executive officer and co-chief investment officer of Newport Beach, California-based Pimco.
Pimco last week named 45-year-old Ivascyn, a top-ranked money manager, as CIO as it seeks to revive performance and restore calm at a firm that has been rattled by management disputes. Gross left Pimco, which has almost $2 trillion in assets, for Janus Capital Group Inc. to run a new unconstrained bond fund with about $13 million in assets.
El-Erian on Sept. 27 praised Ivascyn as a “brilliant investor” and an “inspiring leader.” Ivascyn’s Pimco Income Fund has beaten 99 percent of competitors over the past three and five years.
El-Erian, who writes a column for Bloomberg View and is chief economic adviser at Pimco parent Allianz SE, said he was “happy” with his current role in response to whether he would return to Pimco as CEO.
“I have this portfolio of activity and I get to spend a lot more time with my daughter,” said El-Erian.
Gross left after his deputies threatened to quit and management debated his ouster, according to people familiar with the matter. The departure of Gross, who co-founded Pimco in 1971, has prompted investors to review their investments with the firm and move money to competitors.
Pimco named Mark Kiesel, Scott Mather and Mihir Worah to take over management of the Pimco Total Return Fund, the world’s largest bond mutual fund. Investors removed $23.5 billion from the fund in September, with the largest withdrawals coming on the day of Gross’s departure, according to Pimco.
Three large mutual funds previously managed by Gross, the Total Return Fund, the Unconstrained Bond Fund and the Low Duration Fund, accounted for more than 90 percent of the redemptions Pimco’s U.S. funds suffered in September, according to data from Chicago-based Morningstar Inc.
The three funds accounted for $23.3 billion of the estimated $25.5 billion pulled from all Pimco mutual funds in September, according to Morningstar, whose estimates do not include redemption requests made on Sept. 30 and differ from Pimco’s numbers.
Pimco’s Total Return ETF, which was managed by Gross, lost $11 million to withdrawals yesterday as the pace of redemptions eases. Investors pulled $22 million from the fund on Oct. 1 after yanking a record $446.5 million on Sept. 26.
El-Erian joined Pimco in 1999 as a senior member of the portfolio management and investment strategy group after working for the International Monetary Fund for 15 years. He left in 2006 to serve as CEO of Harvard Management Co. and revamp the university’s endowment before rejoining Pimco about two years later.
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