As advisors and investors look on (or withdraw assets) as PIMCO’s saga continues, co-founder Bill Gross is — unsurprisingly — having trouble keeping his spirits up. What may not have been anticipated, though, is how honest he is being about the situation, which erupted in January when then-CEO Mohamed El-Erian said he was leaving the firm.
“It’s been like a near-death experience, an emotional blow,” Gross said in a cover story in this latest issue of Bloomberg BusinessWeek. “Whenever I read the newspaper, “I say to myself, ‘At least my wife loves me.’ ”
Investors haven’t exactly been loving PIMCO lately.
The PIMCO Total Return Fund fell 1.2% in the year ended March 31, according to Bloomberg. That puts it behind close to 90% of similar funds. Plus, its volatility (4.3) was higher than the group average (3.6), and over the past five years, the flagship fund’s risk-
This performance prompted investors to withdraw some $40 billion from Total Return in 2013 and another $8 billion in early 2014, adds Bloomberg.
El-Erian joined PIMCO in 1999. He left in 2006 to run Harvard’s endowment for nearly two years, and then returned.
“Mohamed and I, we sort of settled in like a married couple,” Gross told Bloomberg Businessweek’s Sheelah Kolhatkar.
“When clients would come in — and they are our most important consideration — they’d come to see the trading room, but it was obviously to see us,” he added. “We’d jointly greet clients, and — ‘Mohamed, what do you think?’ ‘Bill what do you think?’ — We would act as a team.”
Thus, when El-Erian announced his second departure, Gross took it very, very hard.
“I begged, as much as a man in my position can beg,” he said. “I didn’t get on my knees, but — ‘Don’t leave. What are you doing? Don’t!’ And at some point it was, ‘All right, already.’ ”