(May 27, 2014) — PIMCO has hired economist Paul McCulley for the third time, marking the bond shop’s latest organizational shake-up since the resignation of former CEO Mohamed El-Erian in March.
McCulley, 57, will fill a newly created post of chief economist and will also chair PIMCO’s investment committee, reporting to its Founder and CIO Bill Gross.
“Paul is an experienced and respected thought leader on macroeconomic issues and central banks and he will be an important contributor to our investment process,” Gross said in a statement.
As Newport Beach, California-based firm’s principal economic counsel, McCulley will be leading “discussion on global macroeconomic issues and central bank policy, writing and publishing commentary, and speaking with PIMCO’s clients around the world.” PIMCO said he will not be managing portfolios.
“I look forward to working side by side with Bill as economic counselor and interacting with the deputy CIOs,” McCulley said. “I anticipate writing frequent scholarly essays, as well as maintaining a robust calendar of speaking engagements. PIMCO will always be Camelot to me.”
The economist first joined the now-$1.94 trillion firm in 1990 as an account manager. He left two years later to serve as chief economist for the Americas for UBS until 1999, when he returned to the bond shop as a portfolio manager. He then led the firm’s short-term desk and became a member of the investment committee.
“During his previous years at PIMCO, he played an instrumental role in anticipating and understanding economic dynamics that led to the global financial crisis,” Gross said. “Our clients will benefit from Paul’s tremendous knowledge as we identify and capitalize on opportunities in PIMCO’s new neutral.”
Most recently, he served as chair of the Global Society of Fellows at the Global Interdependence Center publishing papers on monetary and central bank policy. He is also well known for coining the term “shadow banking system”—referring to non-bank financial intermediaries—and formulating the concept of a “Minsky moment,” or a sudden fall of asset values as part of a credit or business cycle.
McCulley’s return comes after El-Erian’s sudden departure and poor performance. PIMCO’s flagship Total Return Bond Fund saw $55 billion in outflows since May 2013, raising alarms at its parent company Allianz whose asset management division fell 28% in earnings in the first quarter this year.
“Bill Gross is one of the most talented and successful investors of our time, and he has built PIMCO over the past 43 years by attracting world-class talent such as Paul to become part of our team,” Douglas Hodge, PIMCO’s CEO, said. “We are excited to have Paul join the firm in his new role and we appreciate Bill’s personal leadership in recruiting Paul to the firm.”
The firm said McCulley will spend up to 100 days per year working in various PIMCO global offices.
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