26th September 2014
Pimco’s Bill Gross is leaving the company, which he co-founded in 1971, to join Janus Capital.
Gross will join Janus on Monday and start fund management on 6 October. He will be based in California and manage the Janus Global Unconstrained Bond fund as well as be responsible for building the firm’s global macro fixed income strategies.
Shares in Pimco’s German owner Allianz fell over 2% on the news while Janus shares increased 20% in pre-market trading in the US.
Gross managed the Pimco Total Return fund, and over the past three years has averaged a return of 9.11% versus 14% in the US dollar-denominated bond sector.
Gross said the move would fulfil his ‘desire to get back to spending the bulk of my day managing client assets’.
‘I look forward to returning my full focus to the fixed income markets and investing, giving up many of the complexities that go with managing a large, complicated organisation,’ he said.
Janus Capital Group chief executive Richard Weil said: ‘Bill Gross has an exemplary track record with decades of success and he will offer an exceptional approach to navigating today’s increasingly risky markets with a focus on macro, unconstrained strategies.
‘His involvement provides Janus a unique opportunity to offer strategies and products that are highly complementary to those already managed by our credit-based fixed income team.’
The move to Janus comes at the back of a bad year for Pimco which is under investigation by the US regulator, the Securities and Exchange Commission. It is looking at whether Pimco artificially boosted the returns of its $3.6 billion Pimco Total Return fund, buying investments at discounted prices but relying on higher valuations when calculating the value of its holdings.
At the time of the announcement, a spokesperson said that its pricing procedures are ‘entirely appropriate and in keeping with industry best practice’ and that it was co-operating with the SEC.
Pimco has made no secret of its plans to target the UK pensions market, aiming to take a slice of the £220 billion invested in defined contribution (DC) pensions and the future growth of funds under auto-enrolment.
Earlier this year, Bill Benz, the head of Pimco’s London office, told Financial News: ‘If I think of a new vehicle strategy that we have in the UK market that we’d like to do more of it would be along these lines – build out our DC capabilities.’
Pimco chief executive Douglas Hodge said there were ‘fundamental differences’ between Gross and the board about how to take Pimco forward.
‘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,’ he said.
‘As part of our responsibilities to our clients, employees and parent, Pimco has been developing a succession plan for some time to ensure that the firm is well prepared to manage a seamless leadership transition in its portfolio management team.
‘Earlier this year, the firm established a new portfolio management leadership structure that reflects our long-held belief that the best approach for Pimco’s clients and our firm is to evolve our investment leadership structure to a team of seasoned, highly-skilled investors overseeing all areas of Pimco’s investment activities.’