George Hopkins, executive director of the Arkansas pension system, said the decision came about due to two factors: a desire to lower risk in the fund's fixed-income portfolio and as a reaction to Gross leaving for the much-smaller Janus Capital, where he will manage an unconstrained fund.
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Pimco strategists recently released an analysis saying the firm considers high-yield bonds a "compelling" opportunity. It was not clear if that approach or the report had anything to do with the Arkansas system's decision. The fund keeps a diversified portfolio that has its highest concentration in global equity, followed by U.S. equity and fixed income, according to its website.
However, it was pretty clear that Gross' exit had a negative impact. The messy departure "came at an inopportune time," Hopkins told P&I.
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While Janus, with $177.7 billion under management, is dwarfed by Pimco's $1.87 trillion, analysts expect the gap to narrow at least somewhat. Industry experts interviewed by P&I for a separate report said they see assets for Janus increasing 25 percent over the next several years, due largely to an influx from retail, rather than institutional, investors.
"Without a doubt it's transformational for Janus," said Jason Weyeneth, analyst at Sterne Agee. He predicted Janus would see an inflow of $45 billion by the end of 2016.
Pimco's assets under management total, reported as of the end of the third quarter, represents a 5 percent drop over the past three months.
A Pimco spokesman did not immediately return a request for comment.
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