Once every three months, the top brass of Pimco gather around a 25-person conference table in the center of a rather ornate-looking hall at the fund manager’s headquarters in Newport Beach, California. The table includes a five-person advisory board featuring former central bank bigwigs like Ben Bernanke and Jean-Claude Trichet, but also three-to-four younger staff members expected to offer a fresh take on the world’s problems. Despite the sunny California location, the dress is more boardroom chic than beach-going cool.
With global markets in turmoil the past two weeks, the group’s next meeting in March should be a doozy: Their job is to set forecasts for the coming three months that will dominate the decisions made by its 250-odd portfolio managers spread around the globe. How far will interest rates rise? How strong is the euro? Where might the next crisis come from?
This top-down approach is a holdover from the days of Pimco’s founder and former chairman Bill Gross, a star investor known as the “Bond King” who left the company on some pretty bad terms about three years ago. When Bill Gross left, so did about one quarter of the fund manager’s business.
The company has been busy reinventing itself ever since. Gone is the star power era that dominated its business under him. But it’s a fine balancing act. “Pimco is still Pimco,” quipped Dan Ivascyn, the leader of the fund manager’s six investment chiefs, and the main protagonist charged with restoring Pimco’s former glory.