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Hours and friction prompted El-Erian exit

Long hours and a frequently fractious relationship with Pimco's founder Bill Gross prompted Mohamed El-Erian's resignation as chief executive of the world's largest bond house, say people familiar with the matter.

Mr. El-Erian often sparred with the company's founder over strategy, in a workplace that insiders say rivals any investment bank for fierce arguments and a hard-charging culture. There was no single argument with Mr. Gross that triggered the move, the people said.

(Read more: Pimco CEO El-Erian resigns effective March: WSJ)

Mohamed El-Erian
Emile Wamsteker | Bloomberg | Getty Images
Mohamed El-Erian

His resignation on Tuesday evening came as a shock to those both inside and outside of Pimco but his plan to leave had been known to a small group of senior executives for several months, the people said.

Mr. El-Erian, whose day in the office starts about 4:15 a.m. in Newport Beach, California, told colleagues he wanted to write a book and spend more time with his family.

He said he was looking for a "third career" after spending 15 years at the International Monetary Fund and 17 years in investment management, both at Pimco – which has $2 trillion of assets under management – and a two-year stint managing Harvard University's endowment.

The resignation was not related to Pimco's recently lackluster performance, the people said. Its flagship Total Return Fund suffered a record $41.1 billion of outflows in 2013 after a botched bet on the direction of US Treasurys led to its worst annual performance in almost two decades.

(Read more: World in 2014 isbetter…but not good enough: El-Erian)

Mr. El-Erian's ubiquity in the media – including writing for the Financial Times – was speculated to be a possible source of tension by one industry consultant. However, people familiar with the company said Mr. Gross approves of – and practices – the art of promoting the company's ideas to a broad range of potential customers.

Though Mr. Gross has emphasized his intention to stay as chief investment officer for the foreseeable future, there is still some doubt over his successor given Mr. El-Erian's exit.

Pimco is looking to bring in additional top managers from outside the company, said people familiar with the matter, though others believe the successor will come from within.

(Read more: El-Erian's exit adds to risks at Pimco)

Promoted to deputy chief investment officers in the reshuffle on Tuesday were Andrew Balls, head of European portfolio management, a former Financial Times journalist and brother of the U.K.'s shadow chancellor Ed Balls; and Daniel Ivascyn, the lead portfolio manager for Pimco's alternative investment strategies.

Mr Ivascyn won the title of fund manager of the year for 2013 alongside his colleague Alfred Murata. The accolade, administered by Morningstar, is seen as one of the industry's top awards. Mr Balls has also "established himself in a big way," according to one insider.

By Tom Braithwaite of the Financial Times

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