Pacific Investment Management Co. is becoming less dependent on Bill Gross, preparing for an eventual future without the world's best-known bond investor and adding pressure on its rising stars to live up to his legacy.
Gross is overseeing a smaller share of Pimco's mutual-fund assets and pulling in less of its cash. His $289 billion Pimco Total Return Fund (MUTF:PTTRX) got 19 percent of Pimco's new mutual-fund deposits in the two years ended March 31, down from 42 percent in the prior period and 79 percent before that, Morningstar Inc. (NASDAQ:MORN) estimates. The portion of mutual-fund assets run by Gross fell to 63 percent as of March 31 from 84 percent a decade ago.
For the $2 trillion Newport Beach, California-based firm, diversifying from funds overseen by its 69-year-old co-founder is critical as interest rates approach zero and investors move beyond traditional U.S. bond funds to capture higher returns. Among the firm's rising stars are fixed-income managers Daniel Ivascyn of Pimco Income, Chris Dialynas of Pimco Unconstrained Bond Fund and Mark Kiesel, global head of corporate bonds. An expansion into stocks is proving more challenging amid mediocre returns and the departure of Pimco's equities chief.
"Pimco has tried to downplay Gross and build an institutional brand," said Burton Greenwald, a consultant based in Philadelphia. "If your appeal is based on a single personality your assets are at risk."