Tags: Gross | Pimco | fund | El-Erian

Investors, Analysts Express Concern About Turmoil at Pimco

By    |   Thursday, 13 March 2014 09:02 AM

Investors and analysts are showing misgivings about Pimco in light of reports that co-founder Bill Gross' bullying behavior helped push Mohamed El-Erian to quit as CEO.

El-Erian's exit comes after that of several other Pimco "senior statesmen," including former managing director Paul McCulley, who left in 2010, and Chris Dialynas, a portfolio manager who is taking a sabbatical, Eric Jacobson, a mutual fund analyst at Morningstar, noted to the Financial Times.

He's worried that the firm's six new deputy chief investment officers won't be much of a balance to Chief Investment Officer Gross.

Editor’s Note:
5 Shocking Reasons the Dow Will Hit 60,000

News of El-Erian's departure led several pension funds, including the Florida State Board of Administration (SBA), to place Pimco on a watch list of money managers about whom they have concerns, the Financial Times reports.

"It is quite prudent any time there is senior management change that there be heightened observation," Ash Williams, chief investment officer of the SBA, told the paper. "Being on a watch list does not mean imminent severance."

Calpers, the California state pension fund that is the country's largest, didn't put Pimco on a watch list, but told the Financial Times, "We are monitoring the issue."

According to the Financial Times, Gross will provide an atmosphere where the firm's portfolio managers can express dissent.

"Mr. Gross seems very contemplative about mistakes he may have made in shaping that atmosphere in the past," Jacobson said.

"He has speculated there may have been a lot more silence in the room when he and Mohamed were dominating the [investment] committee, because members of the group were anxious about taking positions that might upset one of them or the other."

Meanwhile, William Popejoy, a Pimco trustee for 23 years, attacked Gross for his salary, fund management performance and management style in a Los Angeles Times interview published Tuesday.

Gross has reportedly been paid $200 million a year. "I don't know what Bill should be paid, but $200 million is not appropriate," Popejoy told the Los Angeles Times.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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InvestingAnalysis
Investors and analysts are showing misgivings about Pimco in light of reports that co-founder Bill Gross' bullying behavior helped push Mohamed El-Erian to quit as CEO.
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2014-02-13
Thursday, 13 March 2014 09:02 AM
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