By Min Zeng
Bill Gross has a new mantra: Pimco is better than ever.
In a transcript of a question-and-answer session posted Tuesday
on the company's website, the co-founder of Pacific Investment
Management Co. said again that the recent change in the asset
management firm's leadership will deliver long-term value for its
clients.
The comments represent Mr. Gross's latest efforts to boost the
confidence of the firm's clients following a year of record
redemptions and a management shake-up.
"Pimco's focus has always been on managing risk and delivering
returns for clients, and I firmly believe that our new investment
structure will allow us to do that even more," Mr. Gross said.
Pimco, a unit of Germany's Allianz SE, announced in January that
chief executive and co-chief investment officer, Mohamed El-Erian,
would leave in mid-March. The news stunned investors and analysts
because Mr. El-Erian had been groomed by Mr. Gross as his
successor.
Mr. Gross promoted a younger cadre of six managers to serve as
his deputy CIOs as the firm's core business--traditional bond-fund
offerings--has been hit by a shift in investor preference for
alternative bond funds and stock funds.
Mr. Gross said he and his deputies "will take turns" leading
daily meetings, which will allow for greater focus on certain
sectors and regions. Mr. Gross said the interaction will help him
learn more by listening, and "it gives others the opportunity to
lead."
"We believe this new format, and the idea sharing it will
facilitate, will be more responsive to market developments. It will
be great!" Mr. Gross said, according to the transcript.
In his February investment outlook, released earlier this month,
Mr. Gross made similar remarks, saying that "we are a better team
at this moment than we were before."
Analysts say it takes time to see whether the new leadership
will beef up Pimco's businesses.
One client said he was optimistic.
"We'll be watching this closely as it is a new paradigm for
Pimco and may or may not be successful, but we are betting it will
work well given the talent involved," said Daniel B. Roe, chief
investment officer in Budros, Ruhlin & Roe. The firm has about
$2 billion in assets under management including more than $125
million in Pimco funds.
In the short term, however, client redemptions have continued.
Clients pulled $3.5 billion net cash out of Mr. Gross's Total
Return Fund in January. It is Pimco's flagship fund and the world's
largest with $236.9 billion under management.
January's net redemption followed a record outflow of $41.1
billion from Mr. Gross's fund last year.
One solace is that January's outflow was the smallest since May
as the fund posted a positive return after last year's loss.
Mr. Gross's fund has handed investors a return of 1.53% this
year through Friday, beating 57% of its peers, according to
Morningstar. Its benchmark, the Barclays U.S. Aggregate Bond Index,
posted a gain of 1.45% over the same period.
The fund has benefited from a decline in U.S. bond yields this
year that sent bond prices higher.
In the comments Tuesday, Mr. Gross said he believes the outlook
for bonds is "much better" than 2013, when bond yields climbed
sharply.
"Interest rates have adjusted upward and now reflect better
value," Mr. Gross said. He continues to favor Treasury bonds due in
four and five years.
Write to Min Zeng at min.zeng@wsj.com
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