Pimco Not Defined by Bill Gross's Total Return Fund, Says New Chief

Pimco chief executive Doug Hodge has said its iconic Pimco Total Return Fund, which was run by co-founder Bill Gross, "does not define Pimco", as the company attempts to turn a corner after the "Bond King's" departure and the losses that were engulfing the fund.

Hodge and Dan Ivascyn, who takes charge at the California-based firm as group chief investment officer, told Reuters that they have spoken to clients about the new leadership.

Ivascyn, whose $50bn (£31bn, €39bn) Pimco Income fund has reported returns of 7.81% year-to-date as of 31 August, beating the 4.81% on the benchmark Barclays Aggregate for the same time period, will not be managing the Total Return Fund.

Mark Kiesel, Scott Mather and Mihir Worah will run the $222bn Total Return fund.

"Over the last five years, we have expanded into far more parts of the fixed income market and into other asset classes and other geographies, so the Pimco Total Return Fund does not define Pimco," Hodge said. "It's an important flagship product of this firm but it is not our only strategy."

"With regard to our clients and the potential for outflows, again, when there is any significant change, we are out communicating with our clients and we are talking with them and we are explaining the changes that are going on," Hodge said.

"The outflows that have happened – and that may happen – we stand by our clients. We are managing assets and are confident that the vast majority of clients will stand with us."

"You will see a lot less self promotion," Mather said about the post-Gross environment.

"And you're going to see a lot more emphasis on performance. It will be a lot more 'We' and a lot less 'I,'" Mather added.

SEC Probe

Pimco is reportedly under investigation by the US Securities and Exchange Commission (SEC) over whether investors were given inaccurate information about the performance of its flagship fund.

Gross, 70, the so-called "Bond King", quit troubled Pimco on 26 September to join Janus Capital Management.

Since the beginning of the year, investors have pulled out $25bn from the Pimco Total Return Fund, the world's largest bond fund, and $6bn from the Pimco Unconstrained Bond Fund, according to Morningstar data as of end August.

Both were personally supervised by Gross, who also managed the Pimco Total Return ETF, the focus of the SEC probe.

Pimco, co-founded by Gross in the 1960s, has been plagued by weak returns and capital outflows, as well as a spat between Gross and his former Pimco protégée Mohamed El-Erian, who quit the firm in early 2014 after a high profile fallout with his boss.