The financial world woke up to a surprise this morning: Bill Gross, co-founder of asset manager Pimco, announced he was leaving the firm to join Janus Capital Group, a mutual fund company better known for its equity products than the fixed income strategies Gross is well known for. While the move itself is surprising, tensions at the firm and directed at Gross himself have been high. It has been a difficult year for Pimco, which has seen large asset outflows and criticism of Gross himself as difficult to work with. In addition, the SEC is investigating whether Pimco inflated the value of its Pimco Total Return fund. Speculation also swirled that Gross was about to be fired before today’s announcement, according to Dow Jones. However, according to a statement from Gross:
“I chose Janus as my next home because of my longstanding relationship with and respect for C.E.O. Dick Weil and my desire to get back to spending the bulk of my day managing client assets.”
Gross will be charged with building out Janus’s Global Macro Fixed Income and global asset allocation businesses and will be named the Portfolio Manager of the recently launched Janus Unconstrained Bond Fund, according to a statement released by Janus CEO Richard Weil this morning.
Janus shares have already surged by 40% today. But what does this mean for Pimco? Allianz, parent company of Pimco, lost $5 billion in market capitalization today alone. Bill Gross was the face of Pimco and there is no immediate successor. With outflows exceeding $65 billion since May 2013 due to performance and a co-founder and “face” of Pimco leaving, other fund companies will likely benefit from bond investors who may be looking for a new home for their assets.
