In the stock market, investors didn’t wait around to assess the implications of Bill Gross’s departure from Pacific Investment Management Co. They sold.
Pimco’s Global StocksPLUS & Income Fund slipped 9.2 percent to $22.80 at 10:40 a.m. in New York, while the firm’s High Income Fund decreased 8.4 percent to $11.40, the biggest drop in almost two years. The Pimco Corporate & Income Opportunity Fund slid 6.3 percent to $17.24, and the Pimco Total Return ETF declined 0.3 percent to $108.61.
Closed-end funds bore the brunt of the selling because they aren’t subject to the intraday redemption and creation processes that cause exchange-traded funds to hew to the market prices of their underlying assets. For instance, as of yesterday, the Global StockPlus & Income fund traded at a 78 percent premium to its net asset value, while the High Income Fund cost 46 percent more than the value of its bonds.
“A lot of people bought into Pimco because of Bill Gross who was the face of the organization and so they’re shooting first and asking questions later,” Bill Mann, chief investment officer of Alexandria, Virginia-based Motley Fool Asset Management LLC, said by phone. “Regardless what kind of hand he had in all the products being impacted, investing is a personal business and the market is saying it trusted Bill Gross.”
Among other Pimco funds down on the news of Gross’s departure are the firm’s Dynamic Credit Income Fund, which declined 1.9 percent to $21.92, and the Pimco Dynamic Income Fund, which fell 1.8 percent to $31.52.
Allianz SE, the German insurer that owns Pimco, slid 6.1 percent in Frankfurt trading. Shares of Janus Capital Group Inc., where Gross is going to work, rallied 32 percent to $14.71 in U.S. trading.
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