Tags: pimco | bill gross | gundlach | doubleline

Pimco Preparing for Redemptions as Gundlach Attracts Money

Monday, 29 September 2014 01:21 PM

Pacific Investment Management Co.’s Chief Executive Officer Douglas Hodge said the firm is expecting and is ready for client redemptions following the departure of co-founder Bill Gross.

In a conference call with analysts where he was joined by top executives at Pimco parent Allianz SE, Hodge said management changes have triggered reviews with some clients and that it’s too early to estimate redemptions at the Newport Beach, California based firm. Jeffrey Gundlach said his DoubleLine Capital LP received hundreds of millions of dollars on Sept. 26 after Gross quit. He said it was the most money gathered in a day this year and the second-highest client deposits since the Los Angeles-based firm started in 2009.

Fixed-income managers like DoubleLine are poised to benefit as investors review their relationship with Pimco after Gross’ surprise announcement that he’s joining Janus Capital Group Inc. California Public Employees’ Retirement System, the largest U.S. pension, the Florida State Board of Administration, and New York City’s five pension plans said they are monitoring the situation. Sanford Bernstein said in a report that Pimco could see withdrawals of 10 percent to 30 percent.

Competitors Profit

“Several competitors will profit,” Markus Zeiss, who manages 1 billion euros ($1.3 billion) including Allianz shares at the asset-management unit of Landesbank Baden-Wuerttemberg, said by phone from Stuttgart, Germany, Monday. “The capital probably won’t move one to one to Janus, because if you were unhappy with Pimco, you’ll probably not just move over, but this does make for an opportunity to move your funds to a competitor.”

Hodge said many of Pimco’s large clients, including Calpers, are sticking with the firm and that the new investment team led by Daniel Ivascyn has removed a lot of “uncertainty” for clients.

Calpers, which has about 1.5 percent, or $1 billion of its fixed-income assets in a Pimco international bond fund, doesn’t have plans to change its investments with Pimco. It will monitor developments and conduct thorough analysis.

“Calpers has respect for both Bill Gross and Pimco investment professionals,” the pension system said in an e-mailed statement.

New Team

The new leadership team, including Gross’ replacement as chief investment officer Ivascyn, sought to reassure clients over the weekend that there will be no major changes in investment strategy.

“It’s business as usual,” said Scott Mather, one of three newly appointed managers of the $222 billion Pimco Total Return Fund. “We’ve all been part of the team as members of the investment committee.”

Investors had been pulling money from the Total Return Fund as the world’s biggest bond fund trailed 63 percent of peers over the past year, on track to underperform a majority of rivals for the third year in four. The fund’s assets have shrunk from a peak of $293 billion last year.

At Janus, Gross will manage an unconstrained bond fund that was started in May. Gross and Janus Chief Executive Officer Richard Weil worked together from 1996 to 2010, when Weil was at Pimco. Janus gained a record 43 percent Friday following news of Gross’s hiring.

Hodge confirmed in the conference call that Gross wasn’t subject to a non-compete agreement with Pimco. The Newport Beach, California-based firm’s employment agreements are based on local labor laws, and non-compete agreements are not easily enforceable in California, Hodge said.

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Pacific Investment Management Co.'s Chief Executive Officer Douglas Hodge said the firm is expecting and is ready for client redemptions following the departure of co-founder Bill Gross.
pimco, bill gross, gundlach, doubleline
Monday, 29 September 2014 01:21 PM
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