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 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.
"We believe this new format, and the idea sharing it will
facilitate, will be more responsive to market developments," Gross
wrote. "It will be great!"
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Gross advised clients and investors in his February investment
letter on February 5 to "stick with PIMCO." He also said: "Believe
me when I say, we are a better team at this moment than we were
before."
In January, investors yanked another $3.5 billion out of the Total
Return Fund, adding to last year's record net outflows of $41.1
billion, according to Morningstar. The fund, with nearly $237
billion of assets, recorded a modest gain in January of 1.35
percent, but still lagged its benchmark, the Barclays U.S. Aggregate
Index, which gained 1.48 percent. For all of 2013 it posted a
negative total return of nearly 2 percent.
Gross said his new team are "experienced investors on the front
lines of strategy and the pursuit of alpha, and their contributions
can only deepen our understanding of the economy and markets and
improve portfolio construction across PIMCO. Ultimately, their
increased nimbleness within their channels and the added layers of
intelligence they bring to the firm overall should translate into
long-term value for our clients."
(Reporting by Jennifer Ablan; editing by
Dan Burns and Diane Craft)
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