THE departure of Bill Gross, the world’s best known bond manager, from PIMCO, the investment firm he helped to found, has many potential lessons. At its simplest, it can be portrayed as a Shakespearean drama; the ageing king who refused to loosen his grip on power. Eventually, his subordinates rebelled and overthrew him.PIMCO’s other titan, Mohamed el-Erian, departed earlier this year, prompting a reorganisation of the management team. The next generation of leaders wanted to expand in new areas, something Mr Gross apparently resisted. The Securities and Exchange Commission, an American regulator, recently announced an investigation into pricing at the Total Return fund, the main outlet for Mr Gross’s talents, creating the potential for damage to his reputation. Mr Gross ostensibly moved to Janus, a smaller fund manager, to focus more on investment and less on management, but he clearly jumped before he was pushed. The lesson could be that founders are rarely good at succession planning; they often stay in place too long.A second lesson concerns whether investment firms are wise to rely on the reputation of a “star” fund manager. At its peak, the Total Return fund...
from The Economist: Finance and economics http://ift.tt/1tkdRga
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