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More investors say goodbye to Gross-less Pimco

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Brent Lewin | Bloomberg| Getty Images

The high-profile departure of Bill Gross has cost Pimco another customer.

As the fallout continues since Gross left the Newport Beach, California-based asset manager last month, the Arkansas Teacher Retirement System said it has cut ties, according to a report in Pensions & Investments.

Pimco had managed about $475 million for the fund as part of its Total Return strategy.

The news comes a week after said it was "significantly" reducing its investments with Pimco, which Gross founded 43 years ago.

Investors in September yanked $17.9 billion from the firm's Total Return mutual fund, which nevertheless remains atop its category with $201.6 billion under management, according to Morningstar. That total, though, is down by more than 27 percent from its peak.

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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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