Gross bolting Pimco for Janus

Bill Gross is leaving Pimco to manage fixed-income portfolios for Janus Capital Group Inc.

The co-founder of Pacific Investment Management Co. will start work at his new job on Monday, and begin managing the new Janus Unconstrained Bond Fund, among other strategies, on Oct. 6, according to a news release from Janus Friday.

The release said Mr. Gross will be working out of a Newport Beach, Calif., office and will be responsible for building out Janus’ fixed-income operations.

“Today, with a mixture of excitement and sadness, I am announcing that I have decided to join Janus Capital Group and end my association with Pimco,” Mr. Gross said in the news release. “…now, after having spent considerable time serving in senior management, it is a time for me to reduce executive and people management responsibilities at a larger firm and focus on the pure aspects of portfolio management at a smaller one. Janus is the right fit at the right time in my career — and my life.”

Earlier this week, it was reported that Pimco was under investigation by the Securities and Exchange Commission over how it valued certain bonds in its $3.6 billion Total Return Bond exchange-traded fund, which helped boost returns. Mr. Gross is the manager of that ETF as well as the firm’s Total Return Bond mutual fund, which has $222 billion in assets. In all, Pimco manages nearly $2 trillion in assets.

(See also: SEC’s investigation into Pimco could ripple through ETF, fixed income markets)

In the news release, Mr. Gross said he chose Janus as his new “home because of my longstanding relationship with and respect for CEO Dick Weil and my desire to get back to spending the bulk of my day managing client assets.”

Mr. Weil is a former managing director and chief operating officer of Pimco.

Mr. Gross’ “arrival at Janus will provide the firm with a very unique opportunity to offer global macro fixed income strategies and products that are highly complementary to the very successful credit-driven fixed income franchise that we have built out over the last decade,” Mr. Weil said in the news release.

Janus rose 40% to $15.57 in pre-market trading at 9:07 a.m. in New York. Allianz SE, the German insurer that owns Pimco, declined as much as 4.7% in Frankfurt, the most in more than a year.

Mr. Gross is leaving Pimco amid record redemptions at the flagship Total Return fund. The firm is also struggling with negative publicity stemming from the abrupt departure of its former chief executive officer, which was followed by the biggest management overhaul in its history. Mr. Gross’s Total Return mutual fund has experienced 16 straight months of redemptions as returns trailed rivals and investors sought alternatives to traditional bond strategies in anticipation of rising interest rates.

“It was not without great thought and deliberation over quite some time that I decided to begin this next chapter,” Gross said in an emailed statement from Janus spokesman Steven Shapiro. “It is a time for me to reduce executive and people management responsibilities at a larger firm and focus on the pure aspects of portfolio management at a smaller one.

(This story was supplemented with reporting from Bloomberg News.)