‘Bond king’ Bill Gross quits Pimco to join Janus Capital

Janus stock up 33% on hope that investors’ money will follow departing executive

Bill Gross: “looking forward to be able to continue this run with Janus.” Photographer: Andrew Harrer/Bloomberg

Bill Gross: “looking forward to be able to continue this run with Janus.” Photographer: Andrew Harrer/Bloomberg

 

Bill Gross, the famed “bond king”, has resigned from Pimco to join competing asset manager Janus Capital, leaving the company he built into the world’s largest fixed income manager over a 42-year career.

The sudden departure caps a turbulent year for Mr Gross and Pimco, which has been beset by management infighting that contributed to the resignation in January of Mohamed El-Erian as chief executive.

“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,” said Douglas Hodge, who succeeded Mr El-Erian.

Shares in Janus, a star of the dotcom boom and victim of the ensuing crash, rose more than 33 per cent on the hope that investors’ money would follow Mr Gross out of Pimco.

“We would expect a good deal of Pimco clients switching to Janus, simply attracted by the long track record of Bill Gross,” said analysts at Bernstein Research, which predicted outflows of 10 to 30 per cent of the assets of Pimco.

Shares in Allianz, the German insurance group which owns Pimco, fell 6.2 per cent to €128.20.

Allianz said it had been made aware of Mr Gross’s resignation and would announce a successor in the “coming hours”. Insiders said Daniel Ivascyn, deputy chief investment officer, was favourite to replace him.

Mr Ivascyn is part of a the new generation of bond managers who made their name during the financial crisis. He co-manages the $38 billion Pimco Income Fund, which rose 4.8 per cent last year, beating 82 per cent of peers, according to Morningstar, the investment rating service.

That was despite a chunky investment in emerging markets bonds – 19 per cent at the end of April – that were hit hard during the year. The performance was boosted by holding mortgage-backed debt not guaranteed by US government agencies which benefited from an improved housing market.

Mr Gross said in a statement he was leaving Pimco “with a mixture of excitement and sadness” to live a “simpler” life. “I . . . am looking forward to be able to continue this run with Janus,” he said.

A Janus spokesman said Mr Gross will launch a global macro fixed-income division within Janus on October 6th.

Mr Gross earned his bond king nickname for his superb long-term record. – Copyright The Financial Times Limited 2014