Organizational changes at PIMCO

December 8, 2014

Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans.

PIMCO has announced the departure of William Gross, Chief Investment Officer (CIO), and original co-founder of PIMCO, from the firm effective September 26, 2014.  It has been confirmed that he has accepted the role of portfolio manager at Janus Capital Group (Janus).

On September 26th, 2014, PIMCO's Managing Directors elected Daniel Ivascyn as Group CIO, succeeding Mr. Gross. The firm also made the following appointments:

  • Andrew Balls, CIO, Global;
  • Mark Kiesel, CIO, Global Credit;
  • Virginie Maisonneuve, CIO Equities;
  • Scott Mather, CIO U.S. Core Strategies; and
  • Mihir Worah, CIO Real Return and Asset Allocation.

Mr. Gross communicated that he resigned in order to move away from people and firmmanagement responsibilities, and to focus solely on investment-related activities. Janus is led by Chief Executive Officer (CEO) Dick Weil, a former colleague of Gross' at PIMCO between 1996-2010.

PIMCO's CEO Douglas Hodge has acknowledged that there were fundamental differences between senior management and Mr. Gross on the firm's strategy and direction.

Below is a summary of the senior management changes:
Prior to September 26, 2014

  • CIO: William Gross
  • Deputy CIOs: Dan Ivascyn, Andrew Balls, Mark Kiesel, Virginie Maisonneuve, Scott Mather and Mihir Worah

After September 25, 2014:

  • Group CIO: Dan Ivascyn
  • CIOs: Andrew Balls, Mark Kiesel, Virginie Maisonneuve, Scott Mather, Mihir Worah

Douglas Hodge, CEO, and Lew Jacobs, President, continue to serve in their current roles.

In January 2014, Mohamed El-Erian, CEO and Co-CIO at the firm, announced his decision to leave the firm. As a result, Douglas Hodge (previously COO) was appointed CEO; and Andrew Balls (Head of European Portfolio Management) and Daniel Ivascyn (Head of Mortgage Credit Portfolio Management and Lead Portfolio Manager for Alternative Strategies) were appointed Deputy CIOs.

Mr. Ivascyn is a member of PIMCO's Executive Committee and a member of the Investment Committee. In 2013, Morningstar named him Fixed-Income Fund Manager of the Year (U.S.). Mr. Ivascyn has 23 years of investment experience and holds an MBA in analytic finance from the University of Chicago Graduate - School of Business and a bachelor's degree in economics from Occidental College.

Sun Life Financial Comments
While Mr. Gross was not the named portfolio manager on all of PIMCO's investment strategies, he was the most significant individual when assessing key person risk at the firm. All of PIMCO's investment strategies are derived from an overall "house view" or model portfolio, which come from the firm's Investment Committee and annual secular forum. Individual portfolio managers do not have discretion to deviate substantially from these views. We do not have material concerns with the Canadian fixed income funds in the short term, given that philosophy remains anchored in these firm-wide views. However, we do recognize that Mr. Gross was the single largest individual shaping the overall investment strategy; this was even more significant following the loss of El-Erian, as no Co-CIO successor was named.  

The management team of the Canadian Fixed Income funds has been stable and to date, there have been no departures. We believe that the current team in place has the knowledge and resources to continue to effectively manage the PIMCO fixed income funds available through Sun Life Financial's Defined Contribution and Defined Benefit core investment platforms. We will continue to closely monitor whether Gross’ departure causes any further high-level investment team departures and the level of firm-level asset redemptions, which could cause further instability.

Please contact your Sun Life Group Retirement Services representative.