The chief executive of Pimco, the world’s largest bond house, has unexpectedly resigned. Mohamed El-Erian, one of the world’s most well-known institutional investors, will step down in March and be replaced
as chief executive by Douglas Hodge, the current chief operating officer.
El-Erian first joined Pimco in 1999 and rejoined the firm in 2007 as co-chief investment officer with co-founder Bill Gross and together the two helped the asset manager to amass more than $2 trillion in assets under management, often taking it in turns to chair the daily investment conference.
However returns have faded and withdrawals have grown in the last 12 months as both equities and alternative assets have become more popular with investors. The firm’s Total Return Fund, managed by Gross, saw record outflows of $41.1 billion in 2013 while its US-listed mutual funds suffered $30.4 billion in withdrawals, the first since 2003. Meanwhile Pimco has also lost ground to the likes of BlackRock and Vanguard in the ETF market.
Gross, 69, will continue as the sole chief investment officer and the public face of the company. He quelled any speculation that he was about to step back from an executive role, tweeting: “PIMCO’s full engaged. Batteries 110% charged. I’m ready to go for another 40 years.”
It had been thought that El-Erian would eventually take over from the 69 year old Gross who will continue as sole chief investment officer and the public face of the company. As part of the company reshuffle, Andrew Balls, head of European portfolio management and Daniel Ivascyn, lead portfolio manager for Pimco’s alternatives investment strategies, have been promoted to deputy chief investment officers.
El-Erian will remain on the International Executive Committee of parent company Allianz, advising on economic issues. It has also been speculated that Egyptian-born El-Erian may take on a policy role in his country of birth.
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