John Waggoner, and Roger Yu

USAToday

Bill Gross, founder of bond giant Pimco and a guru in the fixed-income business, has left his post as chief investment officer at the company and joined mutual fund management firm Janus Capital, a move that follows record outflows last year and his clash with other top executives.

In an announcement released Friday morning by Janus, Gross said he left to focus less on managerial and operational duties and more on his chief passion, investing in bonds. But his departure, coming eight months after his top deputy, Mohamed El-Erian stepped down, will trigger speculation among bond market watchers about leadership uncertainties and other reported troubles at the world's largest bond firm.

In a statement, Pimco CEO Douglas Hodge hinted that Gross' departure was inevitable. "While we are grateful for everything Bill contributed to building our firm and delivering value to Pimco's clients, over the course of this year it became increasingly clear that the firm's leadership and Bill have fundamental differences about how to take Pimco forward," Hodge said.

Shares of Janus Capital Group rose 43% Friday to $15.89. Allianz SE, the German parent of Pimco, fell 6.1% to $16.37.

"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," Gross said in a statement.

"But 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."

Gross may have chosen to leave as a pre-emptive move. With tensions reported inside the firm, Pimco was getting ready to fire Gross just before he resigned, according to The Wall Street Journal, citing people familiar with the matter.

Allianz says it'll name Gross' successor "within hours," according to Bloomberg News.

Gross' legendary management ability was the driving force behind Pimco, but his sometimes abrasive personality has caused trouble within the $2 trillion powerhouse in Newport Beach, Calif.

Gross drove Pimco Total Return, its flagship fund, to a 6.22% average annual return the past 15 years, putting it in the top 12% of its peers. The fund's assets have swollen to more than $225 billion.

Gross' opinions have been sought by Treasury secretaries and the Federal Reserve, and his personal fortune is estimated at $2.3 billion.

Nevertheless, Gross' tenure at Pimco has been marred in recent years by underperformance and high-profile spats with other employees, most notably El-Erian, who quit his $100-million-a-year job at Pimco in January. And last week, Pimco acknowledged that the Securities and Exchange Commission is investigating pricing practices at the exchange-traded version of Pimco Total return.

"It was getting messy there, and he was getting involved in things he didn't want to do," says Wharton professor of finance Jeremy Siegel. "He has reached a level where he should be doing exactly what he wants to do, and he wants to manage bonds."

Clearly, Gross doesn't need the work at Janus Capital, a fund company that manages about $178 billion and has struggled ever since the bursting of the technology bubble in 2000 and was further wounded by the mutual fund trading scandal of 2004.

Janus, however, has offered him a chance to do what he enjoys, which is managing bonds. He will take immediate management duties over Janus Unconstrained Bond fund, and his presence will undoubtedly bring assets to Janus.

"His 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 under the leadership of Gibson Smith," Dick Weil, Janus CEO, said in a statement.

Weil worked for Gross at Pimco for 14 years before taking the top job at Janus in 2010. At Pimco, Weil's had numerous jobs, including 10 years as its COO. He also served as the global head of Pimco Advisory, a member of Pimco's executive committee, and a member of the board of trustees of the Pimco Funds.



Read Janus Capital's statement: