Financial executives found themselves baffled today following the announcement of Newport Beach-based Mohamed El-Erian that he his leaving his job as chief executive of Pacific Investment Management Co., one of the world's biggest and most influential investment firms.
El-Erian unexpectedly announced his resignation as CEO Tuesday. Pimco offered no explanation for the departure.
The company said El-Erian, 55, will step down in mid-March as part of a broader management overhaul but will remain an advisor to Pimco's parent company. Douglas Hodge, the chief operating officer, was named to succeed El- Erian.
The soft-spoken El-Erian was a frequent TV commentator on financial issues. His ubiquitous appearances could sway financial markets, according to The Times.
"He was doing CNBC and Bloomberg and all the editorials to make him so prominent -- and then, poof," Marilyn Cohen, president of Envision Capital Management in Los Angeles, told The Times. "To see him leave is so shocking. There was no prelude to this."
Pimco manages $2 trillion in assets. But its once-sparkling fortunes have dimmed a bit, according to The Times.
The outlook for the company's signature bond investing is threatened by changes in the financial markets, which are expected to weigh heavily on fixed- income investment returns in coming years, The Times reported. Investors fled bonds for stocks in 2013, in part because of Federal Reserve policies that made the equities market attractive.
Pimco's bellwether Total Return Fund, the world's largest bond fund, sustained a 2.3 percent loss last year, prompting disheartened investors to withdraw more than $40 billion, according to The Times, which reported that the company has worked furiously in recent years to branch into stock investing, but with limited success.
El-Erian had been widely viewed as the heir apparent to investing guru Bill Gross, Pimco's co-founder, who runs the Total Return Fund. The company stressed that Gross is staying put. El-Erian said in a letter to the staff that "I have no plans as of now. What I do know is that I am looking forward to something different."
Wall Street was consumed Tuesday with competing narratives about what lay behind El-Erian's exit, The Times reported. Some analysts speculated Pimco's parent company was dissatisfied with the middling push into stock investing.
Some thought El-Erian might be planning a move into national politics,
perhaps as a high-level advisor to Hillary Clinton. Others said he might simply
want to step back from the breakneck pace he set at Pimco, The Times reported.
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