Sep 26, 2014 11:40 AM
PIMCO's Bill Gross to join Janus Capital
The Associated Press
NEW YORK (AP) Bill Gross, who co-founded and led the giant fund manager Pimco for more than four decades, is leaving the company to join Janus Capital.
Investors have been pulling money out of Pimco's Total Return Fund, the world's biggest bond fund, for more than a year over worries about Gross' ability to continue to deliver big returns. Investors have also been rattled by reports of a regulatory probe into the way Pimco has been valuing bonds in a smaller fund and by management turmoil at the company. In January, Gross's heir apparent, Mohamed El-Erian, abruptly resigned.
Gross will help open a Janus office in Newport Beach, California, focusing on fixed-income strategies.
Pimco said in a statement that it had a succession plan in place and a "deep bench of talent" that would help it cope with Gross' departure.
Gross trounced rivals for years with deft moves in and out of bonds, pulling in hundreds of millions of dollars from investors. But lately they've been fleeing. They've pulled money out of the Total Return fund for 15 months in a row, according to S&P Capital IQ.
The fund lost 2.3 percent last year, its first loss in more than a decade, according to S&P Capital IQ. This year, it has returned 3 percent.
Gross was one of the founders of Pacific Investment Management Co., or Pimco, in 1971, and helped build the Newport Beach, California-based investment company into one of the world's largest bond managers. Today, the company manages almost $2 trillion in assets.
Gross and El-Erian, co-chief investment officer before his departure, helped steer the company through the tumult of the financial crisis. The two helped develop Pimco's concept of the "new normal" a widely cited idea that economies will grow more slowly after the crisis and big investment returns will be hard to come by.
"While we are grateful for everything Bill contributed to building our firm and delivering value to PIMCO's clients, over the course of this year it became increasingly clear that the firm's leadership and Bill have fundamental differences about how to take PIMCO forward," PIMCO's Chief Executive Officer Douglas Hodge said in a statement.
Gross will join Janus at the end of the month and manage the company's recently launched Unconstrained Bond Fund, Janus said in a statement. He starts at the company on Monday.
Janus Capital Group's stock soared $3.20, or 29 percent, to $14.31 following news that Gross would be joining the firm.