Who is the man replacing the ‘Bond King’?
NEW YORK (AP) — With Bill Gross’ surprise departure from Pimco, 45-year-old Daniel Ivascyn now finds himself watching over trillions in assets at the huge mutual fund firm.
The new chief investment officer takes over from a fiery Wall Street legend. Gross co-founded Pimco in 1971 and ran the firm for four decades, turning the company’s flagship product, the Total Return Fund, into a $221 billion behemoth. His success earned him the title “Bond King.”
Ivascyn is also highly accomplished, and Pimco watchers say his even-handed management style will provide much needed relief to the California-based firm that has been roiled by big-name departures.
“By choosing Ivascyn, Pimco is making a conscious effort to move the firm toward a team-oriented culture,” says Scott Burns, global director of manager research at mutual fund research company Morningstar. Gross may have brought investors the performance they wanted for decades, but at 70 years old, he was at the end of his career, Burns says.
Ivascyn is a 16-year veteran of Pimco and runs the Pimco Income Fund, which has $38 billion under management. The fund is up 7.6 percent this year, compared with the 4.8 percent rise in the Barclays U.S. Aggregate Bond Index, the benchmark most bond funds are measured against.
That fund rose 4.8 percent in 2013, a year that was considered difficult for bond investors due to rising interest rates that caused a lot of funds to underperform. As a result, mutual fund tracking company Morningstar named Ivascyn their Fixed-Income Manager of the Year.
Gross, who left Pimco last week to join Janus Capital Group, has seen his performance lag many rivals. His Total Return Fund lost 2.2 percent last year, according to Pimco, its first loss in more than a decade. His management style has also raised eyebrows.
Pimco’s chief executive and co-chief investment officer Mohamed El-Erian left the firm in January over what was reported to be a long-simmering dispute with Gross over the firm’s direction. Ivascyn was one of six deputy chief investment officers chosen to replace El-Erian and delegate more responsibility among the firm’s younger members.
The departure of Gross leaves Ivascyn with potentially serious challenges. A report from Bernstein Research estimated that Pimco could lose as much as 30 percent of the money in its funds as investors follow the Gross to Janus, or move their money to other firms.
Besides the Pimco Income Fund, Ivascyn co-manages Pimco’s Unconstrained Bond Fund, which has roughly $21 billion in assets. Unconstrained funds have grown in popularity among investors due to their ability to invest in nearly every type of fixed-income investment.
Before joining Pimco in 1998, Ivascyn worked at Bear Stearns focusing on mortgage-backed securities. He has a master’s in business administration from the University of Chicago and a bachelor’s degree from Occidental College.