El-Erian to Leave Pimco as Bond Market Stumbles

Pimco

After more than ten years at one of the world’s largest asset managers, Pimco CEO Mohamed El-Erian is stepping down from his leadership role and leaving the firm in mid-March. However, he will remain on the International Executive Committee of Allianz and will advise the Board of Management of Allianz SE on global economic and policy issues.

Bill Gross, founder of Pimco, will continue to serve as the company’s chief investment officer. He notes that, “Mohamed has been a great leader, business builder, and thought leader for Pimco and our clients. Together, we have guided the firm and served our clients during a period of significant change in the global economy and financial markets. We are pleased that he will remain a part of the Allianz Group.” Pimco is a U.S.-based asset management subsidiary of Allianz.

While the announcement surprised investors, it appears the decision was well-known to Pimco as several promotions were also announced at the same time. The firm’s  managing directors elected Douglas Hodge, managing director and currently chief operating officer, as the new chief executive officer. Jay Jacobs, managing director and currently global head of talent management, will become president.

“I have been extremely honored and fortunate to work alongside Bill Gross, who is one of the very best investors in the world,” explains El-Erian, in a press statement. “His talents are truly exceptional, as is his dedication. I have also been amazingly privileged to work with the most talented group of professionals in the investment management industry. Their commitment and tireless work on behalf of our clients have been a consistent inspiration for me since I first joined PIMCO back in 1999. I wish them continued great success.”

El-Erian did not provide a reason for his resignation, but the move comes at a time when the bond industry is witnessing a major shift in sentiment. In 2013, bond mutual funds suffered a record amount of outflows at $80 billion, easily beating the previous record of $62 billion in 1994. Pimco’s Total Return Fund, the world’s largest bond fund, experienced a decline in assets for eight consecutive months and posted its worst annual performance since 1994. In December, investors pulled $4.2 billion from the fund.

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