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By Christine Benz and Eric Jacobson | 01-29-2014 10:00 AM

PIMCO Aims to Ease Succession Worries

Morningstar's Eric Jacobson sees PIMCO's appointment of four new deputy CIOs as an effort to reassure investors there is a succession plan in place for Bill Gross after heir-apparent El-Erian's departure.

Christine Benz: I'm Christine Benz for Morningstar.com.

On the heels of the departure of PIMCO's CEO and chief investment officer, Mohamed El-Erian, last week, PIMCO has announced a slew of additional manager changes.

Joining me to discuss them is Eric Jacobson, a senior fund analyst with Morningstar.

Eric, thank you so much for being here.

Eric Jacobson: Glad to talk to you, Christine.

Benz: Eric, last week PIMCO appointed two deputy chief investment officers. This week we are seeing additional deputy chief investment officers appointed. Let's talk about what's going on there and also get your take on what it means for the firm.

Jacobson: They have added another four folks to this list. There will now be a total of six deputy CIOs. The previous ones already announced were Andrew Balls and Dan Ivascyn. Balls coming with primarily a macro foreign-bond background but still a portfolio manager. And then Dan Ivascyn, who comes with a lot of mortgage market expertise.

The additional folks now are Mark Kiesel, who also manages a large number of corporate and investment-grade corporate assets, including at least a couple of mutual funds. Scott Mather, who comes also from the global bond side, is now a deputy CIO. And then Mihir Worah, who historically has been focused on real return, TIPS and commodities and so forth. He has a really interesting broad and international background. He is now a deputy CIO as well. And the final one is Virginie Maisonneuve. She is responsible for equity investing at PIMCO and will be an important representative there.

As part of these elevations, all these folks will be joining PIMCO's Investment Committee, which I think is very interesting.

Benz: You have mentioned to me prior to this that you think these changes are meant to shed some light on succession planning or at least provide a little bit more transparency into succession planning for the day when Bill Gross may not be so actively involved in running PIMCO. Let's talk about that, and why you see this as a step in that direction?

Jacobson: Prior to Mohamed El-Erian's departure, he really had been signaled as the heir apparent. Gross actually, I believe, said that at one point. The problem is, there really wasn't anybody behind the two of them that had been at all advertised or signaled to be even in the running for potentially replacing either one of them at some point.

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