The biggest star in the bond market has shocked the financial world by leaving the huge money management firm he has led for four decades and joining a much smaller rival.
Bill Gross, who co-founded the investment giant Pimco in 1971 and runs its $US222 billion Total Return Fund, said on Friday he would join Janus Capital Group.
The prospect that investors would follow the guru-like fund manager and pull their money out of Pimco sent the stocks of several rival investment companies soaring.
Janus soared 43 per cent. Allianz, the German company that owns Pimco, dropped 6 per cent.
"Many people invested in Pimco's Total Return know Bill Gross, and they want his expertise," said Todd Rosenbluth, director of fund research at S&P Capital IQ. "Money will leave Pimco. It's just a question of how much."
Gross has trounced rivals for years with deft moves in and out of bonds, earning the title "Bond King" and attracting hundreds of billions of dollars into Pacific Investment Management Co. But lately his performance has lagged that of many rivals and his management style has raised eyebrows.
Gross will oversee a recently launched fund at Janus called the Unconstrained Bond Fund from a new office in Newport Beach, California. He starts at Janus, which is based in Denver, on Monday.
Gross writes monthly commentaries on markets that are widely quoted, and his utterances on business TV shows can move markets.
For all his star power, Pimco's flagship Total Return hasn't fared well recently. The fund lost 2.3 per cent last year, its first loss in more than a decade, according to S&P Capital IQ. It's done better this year, returning 3 per cent. Still, that is half of a point less than the average bond fund.
In addition to lacklustre results, investors have been rattled by reports of a regulatory probe into the way Pimco has been valuing bonds in a smaller fund and by management turmoil at the company.
Morningstar, a fund rating firm, put all of Pimco's funds under review on Friday, and financial analysts scurried to assess the impact of Gross's departure on Pimco's business.
In announcing Gross' move, Pimco CEO Douglas Hodge alluded to tension between Gross and top managers.
For his part, Gross noted in a statement he was looking forward to not having to face "many of the complexities that go with managing a large, complicated organisation."
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