A Pimco Stalwart Steps Down With Capable Successors in the Wings

Mihir Worah had big shoes to fill when he took over running Pimco's suite of real return funds in 2008. Predecessor John Brynjolfsson launched the first of them in early 1997, when inflation-indexed Treasury bonds were first issued. They were unpopular, and it was nearly 10 years before there were enough Treasury Inflation-Protected Securities funds to form a dedicated category. By the time Brynjolfsson stepped down, though, he had become synonymous with TIPS investing and Pimco's real return business had become a juggernaut.

Worah came to the job with several years of experience working with Brynjolfsson, not to mention the math chops necessary to earn a Ph.D. in theoretical physics. The transition was seamless, and Worah built a successful record in his own right. He had also become a trusted member of Pimco's senior investment team, progressively taking on new responsibilities managing other investors and becoming CIO of asset allocation and real return in 2014.

Pimco announced plans in early December 2019 for Worah to retire at the end of March 2020, remaining an advisor to the firm through the end of 2020. Given his role, Worah's departure will affect a broad range of strategies, including several for which he isn't listed as a portfolio manager but has had oversight of the managers. Those include areas such as inflation-linked bonds, commodities, and various quantitative, asset-allocation, and target-date offerings.

Worah comanages several funds, and his share of responsibility for each will either be absorbed by existing comanagers or transferred to newly appointed comanagers by the end of 2019. In the United States they include Pimco Real Return PRRIX, Pimco Commodity Real Return Strategy PCRIX, Pimco Total Return PTTRX, and Pimco-subadvised Harbor Bond HABDX. Cross-border offerings include Pimco GIS Global Real Return and Pimco GIS Total Return.

In the case of Pimco Real Return, Daniel He is being appointed comanager to Steve Rodosky, a veteran Pimco leader who joined that fund in January 2019 in anticipation of the departure of then lead manager Jeremie Banet. Pimco won't be adding any new managers to Pimco GIS Global Real Return, which will continue to be comanaged by Lorenzo Pagani and David Brhel.

The real return and commodities portfolios remain in capable hands. Rodosky has a long history running Pimco's long-duration strategies and is an experienced U.S. government rates trader who led the firm's U.S. Treasury trading desk from 2007 to 2016. Rodosky took over a mix of roles after a brief leave back then, including leadership responsibilities across teams and the firm. He also took over as head of Pimco's U.S. inflation-linked desk in early 2019. As a senior leader on the global fixed-income team, Pagani heads the firm's European rates managers and has managed European and global bond portfolios for several years. Nic Johnson has overseen the day-to-day management of the firm's commodities portfolios for several years and has been instrumental in improving the broader investment team's portfolio construction analytics, among other contributions.

In the case of Pimco Total Return, Harbor Bond, and Pimco GIS Total Return, firm veteran Mohit Mittal will be joining incumbents Scott Mather and Mark Kiesel as a comanager. Mittal's responsibilities have expanded considerably since he joined Pimco in 2007 as a rates and derivatives specialist; senior leaders have often dubbed him a rising star at the firm. In addition to managing a wide range of portfolios--including investment-grade corporate debt (he's been a comanager on Pimco Investment Grade Credit Bond PIGIX since 2016), long duration, and unconstrained bond--Mittal's oversight of the firm's corporate bond traders has broadened over the past several years from U.S. investment-grade to emerging-markets corporates and U.S. high-yield.

We continue to review the potential impacts of Worah's retirement on Pimco's strategies, but for now we don't anticipate changing any of the affected funds' Morningstar Analyst Ratings as a result. In part that's a reflection of the depth and quality of the staff that has been working behind the scenes, much in the way that the firm had Worah ready to take over when Brynjolfsson left. Pimco co-founder Bill Gross deserved a great deal of credit for making that depth the norm. And while Gross' own departure showed some cracks in the firm's succession planning, current group CIO Dan Ivascyn responded in part by continuing to hire and promote highly skilled practitioners--even while the firm was challenged by massive outflows--and by bringing to public roles more of those behind-the-scenes managers. Taken together, those factors have laid the groundwork to avoid disruption as Worah retires from the firm.