Skip to Content
Fund Times

PIMCO High Yield Skipper Jumping Ship; Gross Taking Helm

Veteran Mark Hudoff is leaving PIMCO to join his predecessor, now at Hotchkis and Wiley.


Effective today, Bill Gross is in charge of the day-to-day operations of Fund Analyst Pick  PIMCO High Yield (PHYDX) as well as PIMCO Convertible (PFCAX) and PIMCO High Income (PHK), a closed-end fund.

Mark Hudoff, High Yield's manager since April 2007, resigned and will be joining Ray Kennedy--formerly his boss and head of PIMCO's high-yield effort--at Hotchkis and Wiley in July of this year. Hudoff was with PIMCO for 13 years and joined the firm as a credit analyst in the high-yield department. He founded and developed PIMCO's global high-yield practice in 2004, while also managing U.S. high-yield portfolios.

Bill Gross will take over portfolio management of at least four of Hudoff's funds until PIMCO can find a high-quality replacement. The firm tells us that they have opened up the search to both internal and external candidates. However, PIMCO says it is not in a hurry to find a replacement since Gross is reportedly excited about the opportunity to lead the fund.

Gross will lead a team of nine global high-yield portfolio managers, 30 credit research analysts, and 16 investment-grade portfolio managers. PIMCO says the strategy of the high-yield fund will not change and will continue to rely on PIMCO's bottom-up and top-down macroeconomic research.

We believe shareholders are still in good hands, as PIMCO has a deep research bench. However, this management change does raise eyebrows. Hudoff's was not a planned departure, and it's somewhat unusual that the firm didn't have a successor identified. Furthermore, this is the fourth departure of a well-known PIMCO manager in recent years who didn't appear to be suffering from obvious or major portfolio performance issues; the others were John Brynjolfsson, Sudi Mariappa, and Hudoff predecessor Ray Kennedy. That doesn't worry us with regard to the depth of firm expertise--we are familiar with many of PIMCO's lesser-known managers, and several are rock-star impressive--but it does raise the question of why such top-notch folks haven't wanted, or been able, to stick around longer.

Eric Jacobson, a fixed-income specialist and senior fund analyst with Morningstar, contributed to this report.

Ryan Leggio does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.