(Bloomberg) — Pacific Investment Management Co., seeking to stem redemptions after its co-founder Bill Gross left unexpectedly, was dropped as manager of a $6.16 billion strategy offered by a unit of Prudential Financial Inc.
Pimco, based in Newport Beach, California, will be replaced as subadviser of the AST Pimco Total Return Bond Portfolio by BlackRock Inc. and Loomis Sayles & Co., according to a filing with the U.S. Securities and Exchange Commission yesterday. Pimco will also be dropped as manager of the U.S. fixed-income portion of the AST Advanced Strategies Portfolio, which had $8.75 billion in assets as of Sept. 30.
Prudential, the second-largest U.S. life insurer, didn’t say whether the decision was related to Gross’s move to Janus Capital Group Inc. on Sept. 26. Last month, a record $23.5 billion left the Pimco Total Return Fund, the world’s biggest bond mutual fund, which Gross had run. Former Pimco parent Pacific Life Insurance Co., Ford Motor Co., Massachusetts Mutual Life Insurance Co., Alabama’s Treasury and Florida’s state pension have all moved money away from Pimco in recent weeks.
Lisa Bennett, a spokeswoman for Newark, New Jersey-based Prudential, confirmed the filing and declined to comment further. Mark Porterfield, a spokesman for Pimco, didn’t respond to requests for comment.
The AST fund changes will take effect on or about Jan. 5, according to the filing. The Prudential managers will be Michael Collins, Richard Piccirillo, Gregory Peters and Robert Tipp, according to the filing. The Total Return fund will be managed by BlackRock’s Bob Miller and Rick Rieder, and Loomis Sayles’s Peter Palfrey and Rick Raczkowski.
Pimco’s new chiefs are seeking to calm clients of the firm, saying there will be no major changes in investment strategy at the $202 billion Total Return Fund, the world’s biggest bond fund. They aren’t increasing cash-like holdings in the flagship fund to meet redemptions, Scott Mather, one of three newly appointed managers, said this month.