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PIMCO names AAA-rated income star as Gross successor

PIMCO names AAA-rated income star as Gross successor

PIMCO has announced Citywire AAA-rated manager Dan Ivascyn as its new chief investment officer following the departure of Bill Gross.

Ivascyn is currently one of six deputy chief investment officers at the US-based asset manager.

Gross stepped down on Friday after 43 years with the company he co-founded to join Janus Capital.

PIMCO initially released a statement saying a succession plan had been in the works for ‘some time’, which included the new CIO and changes in portfolio management responsibilities.

The move to the senior post comes nine months after Ivascyn, as well as Andrew Balls, were the first two fund managers to be named as deputy CIOs following the departure of Mohamed El-Erian.

They were joined by four more deputy CIOs – Mihir Worah, Mark Kiesel, Virginie Maisonneuve and Scott Mather – being added to the team later in January.

Promotions and portfolio changes

In addition to Ivascyn's promotion, the five other deputy CIOs will become CIOs of different parts of the company. Balls will become global CIO, Kiesel will be CIO for global credit, Maisonneuve will be CIO for equities, Mather will be CIO for US core strategies and Worah will be CIO for real return and asset allocation.

Mather, Kiesel and Worah will assume responsibility for the $222 billion PIMCO Total Return fund, while Saumil Parikh, Mohsen Fahmi and Ivascyn will succeed Gross on the PIMCO Unconstrained Bond fund.

Meanwhile, former Unconstrained Bond fund lead manager Chris Diaylnas, who stepped down from the company earlier this year, will return from sabbatical during the fourth quarter of 2014.

Commenting on his own appointment and the other changes, Ivascyn said: ‘We have assembled a team of world-class investors over the course of many years, and established a time-tested top-down, bottom-up investment process that will guide our investment philosophy and continue to serve our clients well into the future.

‘Our CIOs and I are fully committed to consistently deliver to our clients the investment excellence that they have rightly come to expect of us.'

Ivascyn has worked for the California-based company since 1998 having joined from Bear Stearns, where he was a member of the asset-backed securities group.

Ivascyn’s promotion comes after a solid period of growth for his PIMCO GIS Income fund, which was launched in January of last year.

This fund has seen assets in the Luxembourg-domiciled fund rise from $4.2 billion at the end of July 2013 to $7.8 billion at the end of July this year.

Investor impact

Echoing comments made by Martin Bürki in the immediate aftermath of the Gross exit announcement, Bernard Aybran of Invesco said Ivascyn’s first task would be to stem outflows.

‘It makes sense for investors to exit PIMCO funds following the news but this will make it very complicated for PIMCO to manage the fallout, especially as most of their funds are daily priced,’ he told Citywire Global.

‘We are already seeing that the TIPS [Treasury inflation-protected securities] market is moving and the only credible explanation is that it is due to his departure as PIMCO is huge on TIPS and index-linked bonds.

‘Investors in the TIPS is a market are typically more buy-and-hold, like pension funds, they buy the TIPS at issuance and keep till it reaches maturity. At the very moment news of his departure broke TIPS market jumped 7bps - 7bp out of 48bp is a lot and this is a real problem for this market.’

Aybran said the Total Return fund’s large exposed to Brazilian debt could also be an area to watch. ‘I’ve also seen that fixed income analysts that have said that as PIMCO is big on Brazilian sovereign bonds and the news has made the spreads move.’

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