Tags: El-Erian | Gross | Pimco | Jacobson

Analysts, Investors Still Concerned About Tumult at Pimco

By    |   Thursday, 20 March 2014 02:48 PM

Analysts and investors remain worried about the turmoil at Pimco that led to the departure earlier this month of CEO Mohamed El-Erian, The Wall Street Journal reports.

El-Erian's exit came after clashes he had with Pimco co-founder Bill Gross and amid misgivings he had about Gross' intense management style, according to the paper.

Morningstar senior analyst Eric Jacobson tells The Journal he saw signs of positive change in corporate governance and culture in a visit to Pimco offices earlier this month.

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But it's a "tricky puzzle" whether six new deputies to Chief Investment Officer Gross are capable of challenging him on investment committee decisions, Jacobson notes.

"It's evident that a lot of people have avoided conflict with Gross in ways that may have kept some of their best ideas from getting to him," he explains.

Gross acknowledged mistakes and promised to do better, especially when it comes to including more voices on the investment committee, Jacobson said.

Morningstar cut its stewardship grade for Pimco to C from B, partly because of the upheaval, The Journal reports. And it lowered Pimco's parent pillar score, which measures a firm's priorities, to neutral from positive.

"The changes to Pimco's Stewardship Grade and Parent Pillar score do not automatically affect Pimco funds' overall Morningstar Analyst Ratings for Funds, yet it is logical to assume that Morningstar analysts would move quickly from here to reassess those ratings on a fund-by-fund basis," Jacobson writes on his firm's site.

David Hunter, chief investment officer of North Dakota's Retirement and Investment Office, which has almost $400 million invested with Pimco, tells Reuters that the firm has contacted his fund several times since El-Erian's departure.

"They were very professional, very diligent," he said. Still, his office, like several other state and local pension funds, put Pimco on its "watch list."

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InvestingAnalysis
Analysts and investors remain worried about the turmoil at Pimco that led to the departure earlier this month of CEO Mohamed El-Erian, The Wall Street Journal reports.
El-Erian,Gross,Pimco,Jacobson
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2014-48-20
Thursday, 20 March 2014 02:48 PM
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