Legendary bond investor Bill Gross has left Pacific Investment Management, the firm he founded in 1971, to join Janus Capital Group, where he will manage a newly created bond fund.
The move follows a year of heavy outflows from his flagship bond fund and a fight with his former chief executive and heir apparent.
Pimco, a unit of German insurer Allianz SE, was getting ready to fire Gross just before he resigned, according to people familiar with the matter. The move was driven by Pimco, not by Allianz, these people said, and comes as tensions had bubbled up at the firm in recent weeks.
The news marks a huge shift in the mutual-fund industry, where the 70-year-old Gross widely was viewed as one of the most influential bond investors of all time. He built Pimco into a $2 trillion bond powerhouse, and his $222 billion Pimco Total Return fund is the largest bond mutual fund in the world.
Gross will manage a newly created Janus Global Unconstrained Bond Fund and related strategies at the Denver-based mutual-fund firm, Janus said in a news release Friday.
The move is an abrupt change for Gross, who will be moving to a much smaller and less prestigious firm than the one he left. Janus CEO Richard Weil joined the company from Pimco in 2010, where he had been chief operating officer.
Gross is to begin working at Janus on Monday and will start managing the bond fund and strategies fund Oct. 6. He will be based in Janus’ new office in Newport Beach, Calif., which is also where Pimco is located.
In a statement released by Janus, Gross said: “I look forward to returning my full focus to the fixed income markets and investing, giving up many of the complexities that go with managing a large, complicated organization. I chose Janus as my next home because of my long-standing relationship with and respect for CEO Dick Weil and my desire to get back to spending the bulk of my day managing client assets.”
In the news release about the hiring of Gross, Weil said, “His involvement provides Janus a unique opportunity to offer strategies and products that are highly complementary to those already managed by our credit-based fixed income team.”
Pimco has suffered as Gross has seen investors pull more than $65 billion from his fund since May 2013 amid spotty performance.
After former CEO Mohamed El-Erian abruptly left Pimco this year, Gross replaced him with six deputy chief investment officers, but the move has failed to stem outflows across the whole company.
This week, The Wall Street Journal reported that the Securities and Exchange Commission is investigating the $3.6 billion Pimco Total Return ETF for artificially boosting returns.
Gross’ behavior grew increasingly erratic in the wake of El-Erian’s departure, according to people familiar with the matter. Several months ago, the Pimco executive committee issued a warning to Gross that he needed to change his behavior, the people said.
