The mystery surrounding former chief executive Mohamed El-Erian’s departure from PIMCO continues two months after the fact. There has been much speculation, but nary a word of explanation from El-Erian. Now, in a recent interview with Bloomberg TV, Bill Gross reveals that the reasons behind El-Erian’s departure are still a mystery to him.
Meanwhile, according to Morningstar, just as long-term U.S.-domiciled mutual funds saw inflows of $40 billion in March — with intermediate bond funds experiencing their first inflow in 11 months and their best month since January 2013 — PIMCO saw outflows of $7.4 billion, $3.1 billion of which exited their Total Return fund.
So what does this all mean for PIMCO? While Morningstar dropped its overall fund family rating — the so-called “Parent Pillar” — from positive to neutral, the Total Return fund retained its Morningstar Gold rating, and many other funds had positive inflows. PIMCO’s bond competitors, especially in the DC market, are knocking on the doors of advisors that hold significant assets in the Total Return fund, but many advisors are taking a wait-and-see attitude about this perennial top bond performer led by one of the star investors of our time.
And with the cloud hanging over PIMCO’s succession plans, it may not be a coincidence that BlackRock just announced an expansion of duties for at least 10 senior managers, as well as new hires.
