CEO Douglas Hodge Cites 'Overwhelming' Relief at Pimco--Update

By Kirsten Grind 

Pacific Investment Management Co. Chief Executive Douglas Hodge says there is an "overwhelming" sense of relief and excitement at the giant asset manager, following the abrupt departure on Friday of bond investor Bill Gross.

In his first interview since the news was announced, Mr. Hodge on Saturday said Pimco executives gave a standing ovation to Daniel Ivascyn, Pimco's new group chief investment officer, following his appointment on Friday afternoon.

"There's a sense of optimism and enthusiasm," Mr. Hodge said.

Mr. Hodge and other Pimco executives spoke with The Wall Street Journal by telephone.

Mr. Gross, 70, resigned from Pimco, the Newport Beach, Calif.-based company he co-founded in 1971, to join Janus Capital Group Inc. to manage a small unconstrained bond fund.

Pimco executives were planning to fire Mr. Gross before he resigned, according to people familiar with the matter. Mr. Hodge said Mr. Gross "tendered a written resignation" that he sent to him on Friday morning, but Mr. Hodge declined to comment further.

A succession plan had always been in place at Pimco, Mr. Hodge said, but the firm began retooling that plan after the March departure of former CEO Mohamed El-Erian. Mr. Hodge has been in his position since Mr. El-Erian left. Before then, he had been chief operating officer.

Pimco, a unit of German insurer Allianz SE, has about $2 trillion in assets under management.

Meanwhile, in his first interview since his appointment as group CIO, managing five other chief investment officers, Mr. Ivascyn signaled that the firm would be managed differently than under Mr. Gross. In the past three decades, Mr. Gross had been synonymous with Pimco, sending out long investor letters and often appearing on financial news shows.

Mr. Ivascyn said there will be a much greater focus on a team approach to management. Indeed, the $222 billion Pimco Total Return fund that Mr. Gross managed will now be run by three chief investment officers: Mark Kiesel, Scott Mather and Mihir Worah.

On Pimco's website, a strip of photos on the home page that once prominently featured Mr. Gross has been replaced with those of other executives, though not of Mr. Ivascyn. "In terms of media, that hasn't been an area of focus for me." Rather, Mr. Ivascyn said his top priority will be on generating stellar returns.

In addition to his duties overseeing the other chief investment officers, Mr. Ivascyn will continue managing the $38 billion Pimco Income fund and will join the unconstrained bond fund group at the firm, he said.

The 45-year-old Mr. Ivascyn was named Morningstar Inc.'s bond-fund manager of the year in 2013.

Meantime, Mr. El-Erian, who now serves as chief economic adviser to Allianz, said in a statement on the German company's website: "Dan is a brilliant investor, inspiring leader, superb manager and one of the most considerate and decent people I know. He is a great Group CIO for Pimco."

Investors might not see any difference in investment strategy at the Pimco Total Return fund, at least right away. Mr. Mather, also speaking for the first time in his new role, said the fund will keep its general strategy in place.

Write to Kirsten Grind at [e-mail]

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