El-Erian: Pimco's Gross one of world's best investors

“I have had the privilege of watching him in action and he is a great investor,” said El-Erian, who left Pimco in March

Apr 23, 2014 @ 1:52 pm

Pacific Investment Management Co.'s former chief executive Mohamed El-Erian described Bill Gross as one of the world's best investors in his first television interview since leaving the bond investment firm in March.

“I have had the privilege of watching him in action and he is a great investor,” Mr. El-Erian, chief economic adviser to Allianz SE, said in an interview Wednesday with Betty Liu on Bloomberg Television. “He is part of a talent pool, and enormous bench at Pimco.”

Mr. El-Erian, 55, said he left Pimco after 14 years to do something different. His departure from the world's biggest bond manager sparked media reports of tension with Mr. Gross as the firm struggled to stanch outflows. Mr. Gross, who manages the $232 billion Total Return Fund, said April 10 on a Bloomberg Television interview that Mr. El-Erian's resignation was a mystery to him and he may have been premature in anointing him as his sole successor.

Mr. Gross, who has among the best long-term track records in the industry, stumbled in the past year. The Total Return Fund has advanced 1.7% this year, lagging behind 71% of peers, according to data compiled by Bloomberg, and in the past year is trailing 89% of similar funds.


Mr. El-Erian said he now spends up to 50% of his time advising Allianz, Pimco's parent, and is occupied with what he called a “portfolio” of part-time activities. This includes writing a column for Bloomberg View, the opinion section of Bloomberg News, working on a book about central banks and doing a periodic column for the Financial Times. He's also spending more time with his daughter, whom he cited as a central reason for his exit from Pimco.

“You realize there are special moments in your children's life,” Mr. El-Erian said. “I was missing too many of these special moments. It is that simple.”

The son of an Egyptian diplomat who's fluent in English, French and Arabic, Mr. El-Erian received a bachelor's and master's degree in economics from Cambridge University as well as a Ph.D. from Oxford University. He joined Pimco in 1999 as a senior member of the portfolio management and investment strategy group after working for the International Monetary Fund for 15 years.

He left in 2006 to serve as CEO of Harvard Management Co. and revamp the university's endowment before rejoining Pimco about two years later. Mr. El-Erian, who made a name for himself investing in emerging-markets debt early on in his career at Pimco, was part of the firm's investment committee that sets strategy guidelines.

Mr. El-Erian reaffirmed that the markets are in an era of “new normal,” a term he and Mr. Gross coined in 2009 to describe lower returns, heightened government regulation, diminishing U.S. clout in the world economy and a bigger role for developing nations. Mr. El-Erian called this theme “secular stagnation.”

While the U.S. economy is healing, Federal Reserve Chairman Janet Yellen recognizes the consequences of monetary policy and won't raise interest rates for a while, he said.

(Bloomberg News)


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