Pimco, the bond giant that was founded in 1971 has had Bill Gross as its managing director and chief investment offer until Friday when he announced his leaving the company. According to data gathered by Pimco, it has around 20 closed-end funds that traded by Gross’ name of premium net asset values.
Last Friday, fund investors panicked because of the unexpected announcement of Gross as the closed-end funds dropped bigtime on the news that the high profile executive as heading for Janus. Among the funds that Gross managed, five of them directly dropped a lot more steeply than the others.
What’s the lesson learned in this type of situation? Exits of CEOs are among the major risks that are not easy to hedge that as observed, Pimco with its established name has safe investments that were put at risk with Gross’ leaving.
Yes, smart and active manages will always be assets to bond giants like Pimco for one but finding them is quite a difficult task. If clients are able to find a manager that they trust, they would have second thoughts about continuing to invest in the same company if the manager decides to leave already. In this story of Bill Gross’ decision to leave Pimco, some fund investors of the company obviously are going to pay the price of the man’s fame.