Former PIMCO Parent Pacific Life Moves Accounts to Janus

Debating Ouster

Gross, whose main fund at PIMCO trailed peers since the beginning of 2013, left after his deputies threatened to quit and management debated his ouster, according to people familiar with the matter.

PIMCO, the Newport Beach, California-based firm that oversees $1.87 trillion, was started as a unit of the insurer previously known as Pacific Mutual Life Insurance Co.

In 1994, PIMCO and four other asset managers owned by Pacific Life did a reverse merger with Thomson Advisory Group LP, in which a closely held company acquires a public company. The combined entity, PIMCO Advisors LP, became publicly traded, a run that ended when Allianz SE completed its acquisition of the money manager in 2000.

After Dec. 1, Pacific Life won't accept new allocation instructions to the PIMCO portfolio, according to the filing. The substitution will occur on or about March 6.

The $1.15 billion PIMCO Global Multi-Asset Fund (PGAIX), run by Mihir Worah after his two co-managers left the fund at the end of September, returned 3.8 percent this year, outperforming 92 percent of comparable funds, after losing 8.4 percent in 2013, according to data compiled by Bloomberg. The fund lost 4.9 percent in the past month, dropping to the 15th percentile against peers.

The fund, which Gross has never run, was at various times managed by former Chief Executive Officer Mohamed El-Erian and Saumil Parikh, who runs the firm's cyclical economic forums, was added as a manager. The team shifted in January after El-Erian announced his resignation from PIMCO.

Asset Allocation

Pacific Life is putting money instead into an asset-allocation strategy led by Janus's Gibson Smith and Marc Pinto. The $1.6 billion Janus Aspen Balanced Portfolio mutual fund advanced 3.6 percent this year, beating 86 percent of peers. The fund surged 20 percent in 2013, outperforming 80 percent of competitors, according to data compiled by Bloomberg.

Pacific Life's website still lists four PIMCO funds as individual options through its variable annuities, including two managed by Worah. The PSF Managed Bond fund still lists Gross as a manager.

Gross's Janus Global Unconstrained Bond Fund (JUCIX), which started in May, has lost 0.3 percent in the past month, outperforming 28 percent of peers, according to data compiled by Bloomberg. The fund received $66.4 million in September, according to Morningstar Inc., and had about $80 million under management at the end of September, the data show.

'Possible Disappointment'

The market anticipated $25 billion to $50 billion in new assets at Janus after Gross joined, which may be "setting up for possible disappointment," Citigroup Inc.'s William Katz wrote in a report to clients Oct. 3.

Alabama's Treasury liquidated its PIMCO Total Return Fund holdings in the state's $1.23 billion CollegeCounts 529 plan as of Oct. 1, citing departures of senior investment personnel. The funds were reinvested in the Vanguard Total Bond Market Index Fund, according to a program disclosure statement supplement dated Oct. 1 on its website.

The Arkansas Teacher Retirement System terminated PIMCO, including about $472 million in the Total Return Fund, and California's 529 college-savings plan ScholarShare moved $262 million from Total Return Fund to the TIAA-CREF Bond Plus Fund Institutional Share Class.

Florida's State Board of Administration decided Oct. 7 to "significantly" reduce the $1.9 billion that its pension invested with PIMCO, and to withdraw more than $1 billion that PIMCO manages for the 401(k)-style program it offers workers.

— Related on ThinkAdvisor:

• PIMCO's Q3 Outflows Top 5% of Assets
• Morningstar: PIMCO's Post-Gross Total Return Fund Is Fine—for Now