Bill Gross quits Pimco to join Janus Capital

NEW YORK: Bill Gross, who co-founded Pacific Investment Management Co (Pimco) more than four decades ago and rose to become manager of the world’s biggest bond mutual fund, is leaving amid a dispute with management over how to move the firm forward and end record redemptions.

Gross, 70 and until Friday manager of the $222-billion Pimco Total Return fund, will join Janus Capital Group to oversee a new bond fund. As of Thursday night, Pimco was considering naming Daniel Ivascyn to succeed Gross as CIO, according to a person familiar with the matter who asked not to be identified because the information is private.

“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 organization,” Gross said in a statement. “I chose Janus as my next home because of my long standing relationship with and respect for CEO Dick Weil and my desire to get back to spending the bulk of my day managing client assets.”

Gross’ move was seen as a huge coup for Janus, which has less than $180 billion in assets under management, less than the Total Return Fund and a fraction of Pimco’s total assets. Gross will manage the Janus Global Unconstrained Bond Fund beginning on Monday, the firm said in a statement. The fund, started in May, has just $13 million in assets. The departure of Gross caps a tumultuous year for Pimco and marks the end of an era for the firm he helped create in 1971. Pimco in January announced the biggest management reorganisation in its history after the abrupt resignation of former CEO Mohamed El-Erian, who had clashed with Gross over management of the firm.

In the stock market, investors didn’t wait around to assess the implications of Gross’s departure from Pimco — they sold. Pimco’s Global StocksPlus & Income Fund slipped 7.4% to $22.25 at 12:05 p.m. in New York, while the firm’s High Income Fund decreased 7.4% to $11.53, the biggest drop in almost two years. The Pimco Corporate & Income Opportunity Fund slid 5.2% to $17.44, and the Pimco Total Return ETF declined 0.2% to $108.66. The news hit the US Treasury bond market, sending yields higher and bond prices lower. Allianz fell more than 6%. Janus shares rocketed more than 30% higher to $14.50.

The departure also comes within days of news that US securities regulators were investigating Pimco and Gross in connection with an ETF he managed. The probe is not related to Gross’ departure, a source familiar with the matter told Reuters.