(January 21, 2014) -- Mohamed El-Erian has stepped down as CEO and co-CIO of one of the world’s largest asset managers, effective mid-March of this year.
El-Erian’s departure coincides with a broader shakeup of PIMCO’s senior executives and follows one of the firm’s worst years in decades.
Founder Bill Gross will continue as CIO—although no longer splitting the position—for PIMCO, which managed a total of $1.97 trillion as of September 30, 2013. A new portfolio management team has been appointed, according to the company, and two managing directors—Andrew Balls and Daniel Ivascyn—have been promoted to deputy CIO roles.
Douglas Hodge, current COO and managing director of the firm’s Newport Beach headquarters, will step into the vacated role of chief executive officer, PIMCO said. By all indications, the co-CIO position will cease for the time being with the end of El-Erian’s tenure.
PIMCO’s official announcement failed to provide an explanation for the resignation of Gross’s second-in-command. It did not indicate that El-Erian plans to retire from finance, or of any new future pursuits.
He does plans to remain on the international executive committee for PIMCO’s parent company, Allianz, and “advise the board of management on global economic and policy issues,” the bond manager said.
The recent global economic climate has not been kind to PIMCO. Its hallmark product, the Gross-managed Total Return Fund, shrunk by arecord $41.1 billion in 2013. It closed the year down 1.9%, with $237 billion under management.
Morningstar, which provided the fund flow and return figures, named the PIMCO Total Return fund as one of the biggest losers of 2013.
Gross has remained loyal to his firm’s T-bill heavy strategy in market outlooks, but gestured to the firm’s challenges in his statement on El-Erian’s departure.
“Mohamed has been a great leader, business builder, and thought leader for PIMCO and our clients,” he said. “Together we have guided the firm and served our clients during a period of significant change in the global economy and financial markets.”
Tuesday’s announcement marks the second time El-Erian has resigned as CEO.
In 2005, the doctor of economics renounced his position to lead Harvard University’s then-$28 billion endowment. He spent two years as president and CEO of the Harvard Management Company before taking up his previous posts at the fixed-income powerhouse in 2007.
“I have been extremely honored and fortunate to work alongside Bill Gross, who is one of the very best investors in the world,” El-Erian said January 21. “I have also been amazingly privileged to work with the most talented group of professionals in the investment management industry… I wish them continued great success.”