PIMCO Just Lost Business On Its Home Turf

It’s been a really rough few months for PIMCO, once the most awe-inspiring bond fund around.

And now a rival shop has added insult to injury.

WSJ’s Matt Wirz, Daisy Maxey, and Min Zeng report that the local pension fund in Newport Beach, where PIMCO is based, decided to put $US100 million intended for the bond market with a Swiss fund called GAM.

According to the report, the pension system does invest with other asset managers, but PIMCO was its largest bond manager. This time, they decided to go with a foreign fund.

In January, Co-CEO Mohamed El-Erian announced he would be leaving the company in mid-March, and a scathing WSJ report would later reveal part of the reason why.

Bill Gross, the other CEO, clashed with El-Erian over investment ideas and referred to himself as “Secretariat,” the undefeated racehorse.

The backdrop to all of this is that PIMCO’s flagship Total Return Fund saw $US41 billion in outflows in 2013, an industry worst. All in all, 2013’s bond market sell-off was not kind to PIMCO.

From this latest report, it looks like scrappy smaller funds are using the shake-up at PIMCO to win new business on PIMCO’s own tuf.

Tough times.

Check out the full report at the WSJ »

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