Pimco’s four main U.S. equity mutual funds collectively manage less than $5 billion in assets and have had mixed performance since the first one, Pimco EqS Pathfinder Fund, started in April 2010. Pimco Global-Multi Asset Fund, which opened in October 2008 to put to work the principles outlined in El-Erian’s book “When Markets Collide: Investment Strategies for the Age of the Global Economy,” has returned an annualized 6.2 percent in the past five years, trailing 82 percent of rivals, according to data compiled by Bloomberg.
In picking Hodge as CEO, Pimco is separating its day-to-day operations from its money-management function and leaving Gross firmly in charge of investment decisions. Unlike El-Erian, Hodge has not risen through the investment side of the firm. He joined Pimco in 1989 and previously led business in the Asia-Pacific region from Tokyo.
“Pimco’s fully engaged. Batteries 110% charged. I’m ready to go for another 40 years!” Gross wrote in a Twitter message yesterday.
Pimco as a whole had $30.4 billion in net redemptions during 2013, compared with net deposits of $62.7 billion in 2012, the biggest drop in organic growth among the 10 largest U.S. mutual-fund families, according to Morningstar Inc.
The appointment of Ivascyn and Balls as deputy CIOs elevates the position of the two money managers as clients are fleeing traditional bond funds and seeking ways to earn higher returns in the bond market.
Ivascyn beat peers in 2013, even as other Pimco managers struggled. His $29.9 billion Pimco Income Fund returned 4.8 percent, better than 97 percent of rivals, according to data compiled by Bloomberg. Over the past five years, the fund beat 99 percent of peers.
“He is my number one pick to succeed Bill Gross,” said Steven Roge, a money manager with Bohemia, New York-based R.W. Roge & Co., which oversees more than $220 million. “He has been their most successful investor.”
Morningstar last week named Ivascyn and co-manager Alfred T. Murata as its top fixed-income managers of the year for 2013, praising them for their strong performance last year and during bear markets in 2008 and 2011. Ivascyn manages money for 10 Pimco funds, according to data compiled by Bloomberg.
Andrew Balls, the brother of Ed Balls, treasury spokesman for the U.K. opposition Labour Party, is head of European portfolio management at Pimco. He is listed as a money manager on eight Pimco funds, according to data compiled by Bloomberg, including the $3.5 billion Pimco Global Advantage Strategy Bond Fund. The fund, whose lead manager was El-Erian, beat 49 percent of peers over the past three years, according to data compiled by Bloomberg.
El-Erian will stay on the international executive committee of Allianz and advise the management board of Europe’s biggest insurer on global economic and policy issues, reporting directly to CEO Diekmann, according to the statement.