“““Bill Gross, co-founder and co-chief investment officer of Pacific Investment Management Company (PIMCO), speaks at the Morningstar Investment Conference in Chicago, Illinois, June 19, 2014.
CREDIT: REUTERS/JIM YOUNG
(Reuters) – Morningstar downgraded its analyst rating on the Pimco Total Return Fund to “bronze” from “gold”, citing uncertainty about outflows and the reshuffling of management responsibilities after the exit of co-founder Bill Gross.
Gross, the bond market’s most renowned investor, quit Pimco for distant rival Janus Capital Group Inc (JNS.N) on Friday, a day before he was expected to be fired from the huge investment firm he helped found more than 40 years ago.
Dan Ivascyn, one of Pimco’s deputy chief investment officers, was named Group Chief Investment Officer to replace Gross. With Bill Gross’ abrupt departure, Pimco’s $222 billion flagship Total Return Fund has been taken over by Scott Mather, Mark Kiesel and Mihir Worah.
“The fund’s Bronze Morningstar Analyst Rating reflects Morningstar’s high level of confidence in PIMCO’s resources and overall abilities but also the uncertainty as to exactly how all of these parts will mesh in the wake of Gross’ departure,” Mornigstar analyst Eric Jacobson wrote in a report on Monday.
Since the start of the year, investors have pulled $25 billion from the Pimco Total Return Fund, the world’s largest bond fund, according to Morningstar data as of the end of August. This latest downgrade could set off another chain reaction of negative cash outflow momentum for the Pimco Total Return Fund.