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January 21, 2014 at 11:29 AM
PIMCO CEO Mohamed El-Erian has decided to resign effective mid-March, the bond giant announced Tuesday. Chief Operating Officer Douglas Hodge will take over as CEO of the investment firm. Bill Gross will remain chief investment officer.
“My first reaction is that he has been such a thought leader for PIMCO and a public face for them on CNBC, speaking about the direction of the markets, macroeconomic policy and more,” said Jeff Tjornehoj, head of Americas research for Denver-based Lipper, in an interview with ThinkAdvisor.
According to the PIMCO statement, El-Erian will remain a member of the International Executive Committee of Allianz (AZSEY), the international insurer that is PIMCO’s parent company, and, as of mid-March, also advise Allianz’s Board of Management of the multinational insurer on global economic and policy issues.
“Reading the PIMCO statement [about his news], I get the impression that he will not appear publicly so much anymore and will spend more time on internal operations at Alllianz,” Tjornehoj said.
Tjornehoj says he can’t comment on any Web-based speculation that El-Erian could be considering work for the Egyptian government.
“He had left PIMCO before [in 2005] to go to Harvard and came back a few years later,” the fixed-income specialist said. At Harvard, El-Erian led the Harvard Management Co., the university’s endowment unit. “So, we have seen this before — for different reasons, perhaps.”
About 15 minutes after the announcement was made, Gross said on Twitter, “PIMCO’s fully engaged. Batteries 110% charged. I’m ready to go for another 40 years!”
The partnership between Gross and El-Erian will be missed by those in the industry, Tjornehoj says. “They’ve had an excellent symbiotic relationship, with one generally looking out and one in,” he said. “But PIMCO’s appointed two people to fill El-Erian’s shoes, so it’s doing as much as it can to ensure a smooth transition for clients and employees.”
According to Todd Rosenbluth, director of ETF and mutual fund research at S&P Capital IQ, investors could use some soothing. Last year was “a tough” one for PIMCO, Rosenbluth says. (Investors pulled more than $41 billion of assets out of the PIMCO Total Return Fund, for instance.)
