Mohamed El-Erian Leaving PIMCO, Formal Bond Bull Market End?

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PIMCO is out with a news shocker in the after-hours session, something which may be enough of a shift that could create some unease among the money management firm’s clients. The world’s top-tier bond management firm announced that Chief Executive Officer and Co-Chief Investment Officer Mohamed A. El-Erian has decided to step down from his role and leave the firm in mid-March. PIMCO’s founder Bill Gross will continue to serve as the firm’s Chief Investment Officer.

Allianz said in the press release that El-Erian will remain a member of the Allianz International Executive Committee and will also continue to advise the Board of Management of Allianz on global economic and policy issues.

What is missing in this release is why El-Erian has decided to transition out of the role here. Maybe the bond years ahead just will simply not be as rewarding as the bond years up until recently. With El-Erian being about 55 years old, it does not seem as though he would be on a path to a sit-at-home retirement.

The firm has also appointed a new portfolio management and executive leadership team. They will immediately begin to transition into their new roles. To put a slate of two new Deputy Chief Investment Officers, a new CEO, a new President, and a new Head of Strategic Business Management is not a signal that this was out of left field.

Mohamed El-Erian said, “I have been extremely honored and fortunate to work alongside Bill Gross, who is one of the very best investors in the world. His talents are truly exceptional, as is his dedication. I have also been amazingly privileged to work with the most talented group of professionals in the investment management industry. Their commitment and tireless work on behalf of our clients have been a consistent inspiration for me since I first joined PIMCO back in 1999.  I wish them continued great success.”

As of September 30, 2013, PIMCO had $1.97 trillion in assets under management, some $1.59 trillion in third party client assets, and it claimed 2,478 total employees with 736 some investment professionals.

Again, there is not really a clear explanation of why El-Erian is departing. We would point out that this is on the same day that Neel Kashkari announced that he plans to run for governor of the state of California.