Pimco on Friday selected Daniel J. Ivascyn as chief investment officer, naming a lesser-known insider and successful investor to take over a lynchpin role while reeling from the departure of co-founder and investing legend Bill Gross.
In addition, the Newport Beach, Calif.-based fund manager said that, effective immediately, portfolio managers Scott Mather, Mark Kiesel and Mihir Worah would run the $222 billion Pimco Total Return Fund (PTTAX), the world's largest bond fund. It also appointed Saumil Parikh, Mohsen Fahmi and Mr. Ivascyn to manage the Unconstrained Bond Fund (PUBAX) formerly run by Mr. Gross.
Compared with Mr. Gross, Mr. Ivascyn is not a familiar figure to advisers and investors. But he's been at Pacific Investment Management Co. since 1998.
(Don't miss: Advisers 'blindsided' by Gross departure as Pimco faces rebuilding)
That tenure includes many of the highlights in Pimco's recent history: its 16-fold growth in fund assets from 1998 to 2013, two transformational stints by Mohamed A. El-Erian and now the exit of his predecessor, Mr. Gross, who boasts one of the longest and most successful track records of any bond investor.
Mr. Ivascyn
rose to prominence when he was selected one of Mr. Gross' deputies. This group was installed after the unexpected announcement of Mr. El-Erian's departure in January, which spurred several advisers to
rethink their use of Pimco products.
Mr. Ivascyn's expertise is in asset-backed securities, which have come into increasing focus since being at the nexus of the credit crisis and as investors have sought more appetizing yields in fixed-income portfolios.
Mr. Ivascyn heads Pimco's mortgage credit
portfolio management team, and serves as the lead portfolio manager for the firm's credit
hedge fund and mortgage opportunistic strategies. He also manages the Pimco Income fund (PONAX), a top performer at the firm.
The fund's institutional share class ranks in the top 7th percentile over the last year and the top 1% over three and five years, according to Morningstar Inc. The fund has attracted $7.7 billion in investor deposits over the last year. Morningstar named Mr. Ivascyn fixed-income manager of the year for the U.S. last year. That's a title Mr. Gross earned several times.
Before joining Pimco, Mr. Ivascyn worked at Bear Stearns,
T. Rowe Price and
Fidelity Investments.
He steps into a key role at a difficult time in Pimco's history. The company has suffered $63 billion in investor withdrawals over the year ended Aug. 31, according to Morningstar. Advisers questioned its management when Mr. Gross' co-CIO and heir apparent, Mr. El-Erian, left. It also
faces an investigation by the Securities and Exchange Commission over how it valued some bonds in its Total Return exchange-traded fund.
Mr. Ivascyn will have to manage Pimco as it regroups without Mr. Gross, and he will have to set a vision for bond investing in a time of expected rising U.S. interest rates, an increase that could erode the value of many securities in that market.
Not everyone believes it will be easy for him to meet the twin challenges of managing the Pimco organization and managing investments.
“There are technocrats who have become successful as leaders,” said Tom Brakke, an investment consultant with TJB Research. “It doesn't happen all that often in the investment world, because they're two different things. Obsessing about the markets is a different kind of skill than leading an organization.”
Pimco did not respond to requests for comment.
