Pimco’s El-Erian to step in to shore up $3B multi-asset fund

Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., is expanding his oversight of the firm’s Global Multi-Asset Fund (PGAIX), which has underperformed since it was started five years ago.
Mr. El-Erian, who is Pimco’s co-chief investment officer along with Bill Gross, will select investments for the $3 billion fund effective at the end of this month, along with his current role providing strategic guidance, said a person with knowledge of the change who asked not to be identified because the information is private. Saumil Parikh will no longer be co-manager of the fund, according to a filing yesterday by the Newport Beach, Calif.-based firm.
The Global Multi-Asset Fund, opened in October 2008 to put to work the principles outlined in Mr. El-Erian’s book “When Markets Collide: Investment Strategies for the Age of the Global Economy,” invests in Pimco funds as well as stocks, bonds, commodities and currencies, to provide long-term absolute returns. It returned an annualized 0.4% in the past three years, trailing 85% of rivals, and fell 8% this year, behind 99% of peers, according to data compiled by Bloomberg. Co-managers Vineer Bhansali and Curtis Mewbourne will stay in their roles, according to the filing.
Mr. El-Erian, 55, and Mr. Gross, 69, whose name is synonymous with fixed-income investing, have sought to expand Pimco beyond bonds to stocks, exchange-traded funds and alternatives such as hedge funds. Gross’s $248 billion Total Return Fund (PTTRX) is on track to have its highest redemptions ever this year and Pimco had firmwide net withdrawals of $39 billion in the third quarter.
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Mark Porterfield, a spokesman for Pimco, declined to comment on the fund changes.
Pimco will add internal and external resources for the fund managers, such as fund-analysis tools, to help boost performance, according to the person. Mr. Parikh, who focuses on asset allocation, multisector fixed income and absolute-return portfolios, will continue to manage bond investments and lead the firm’s quarterly cyclical forums, the person said.
Pimco, which oversees about $2 trillion in assets, is the world’s largest fixed-income manager.
Bloomberg News