Pimco's New Bond King Is Nothing Like Bill Gross
Dan Ivascyn's predecessor at Pacific Investment Management Co. was known as the "bond king." But the firm's current investment chief would rather be called just about anything else.
"There's a tendency to bestow royal terms on asset managers," he said at a recent conference. "We're much more like conductors of orchestras."
Mr. Ivascyn's ascension to the top of Pimco epitomizes the new direction taken by the California money manager as it recovers from the most tumultuous period in its history. He succeeded Bill Gross, the Pimco co-founder and bond market legend who exited in September 2014 after clashes with fellow executives.
Hundreds of billions in client money followed Mr. Gross out of Pimco, which later faced a breach-of-contract lawsuit from its former star. Pimco settled that suit for $81 million in March.
Mr. Ivascyn was able to stop the outflows with a team of managers who oversee more than $1.5 trillion -- one of the largest asset pools anywhere in the world. Inflows have outnumbered defections for three straight quarters.
As manager of Pimco's Income Fund, Mr. Ivascyn also attracted enough new money to claim the title of world's largest actively managed bond fund -- a perch long occupied by Mr. Gross's Total Return Fund. The Income Fund now manages more than $79 billion.
"He is the perfect CIO for the Pimco we think of in the future," Pimco Chief Executive Manny Roman said in an interview. "What we've lost, and I would say it is a good thing, is the autocratic style."
Pimco's new CIO bears little resemblance to his predecessor. Mr. Gross was known inside Pimco for his outbursts, was a regular fixture on financial TV shows and occupied an extra-large desk at the center of the firm's trading floor. Mr. Ivascyn typically lets others speak first in meetings, rarely appears on TV and chose a desk no bigger than others. He ended Pimco's practice of reserving choice parking spots for key executives and, until recently, he drove a Toyota Prius to work.
In another departure from the Gross era, Mr. Ivascyn relies more heavily on the expertise of individual portfolio managers to find profitable trades. Under Mr. Gross, managers more closely followed directives set by broad investment calls.
The son of a school superintendent and a nurse, Mr. Ivascyn grew up in a three-bedroom, 1,150 square-foot home in Oxford, Mass., a small town halfway between Boston and Springfield. His grandfather, an immigrant from Ukraine, had changed the family's surname from Ivaszczyszyn.
He got his start in finance after graduating from Occidental College with stints at T. Rowe Price Group Inc., Fidelity Investments and Bear Stearns Cos.' research department. Later, he earned a graduate degree in business from the University of Chicago.
His career at Pimco nearly ended before it began. It was the summer of 1998, and Mr. Ivascyn was the newest trader on the firm's mortgage desk. A week into his new job, hedge fund Long Term Capital Management's implosion roiled markets around the world.
Mr. Ivascyn, who had never traded anything before, struggled to keep up with the chaos. Pimco pulled him from the mortgage desk and exiled him to the opposite end of the same floor, where he sometimes sat alone. Colleagues encouraged him to send out his résumé, people familiar with the matter said.
"The kid is not working out," one portfolio manager told then-Pimco mortgage boss Scott Simon. "He's not a great fit."
He survived this rocky start after Mr. Simon argued that Mr. Ivascyn hadn't been given a fair shot. But it was the 2008 financial crisis that made him a star within Pimco.
He had just taken over a new mutual fund, launched with little fanfare, that sought to meet retail investors' appetite for steady income from bonds. Several other senior Pimco officials turned down the chance to manage the Income Fund because it veered from Mr. Gross's Total Return strategy.
But in early 2008, Mr. Ivascyn directed a team of temps to scour the offering documents of scores of bonds linked to souring mortgages. The research helped Pimco determine which bonds were more or less likely to meet their obligations to investors.
The analysis helped Pimco weather the downturn. And in the years that followed the crisis, it gave Mr. Ivascyn the confidence to invest heavily in bonds that stood to snap back in value as the economy stabilized. The Income Fund, now co-managed with Alfred Murata, was a prime beneficiary of those trades.
"It allowed us to go on the offensive pretty quickly," Mr. Ivascyn said.
But Mr. Ivascyn wasn't immune to the strain that developed inside Pimco as Mr. Gross's relationships with fellow executives deteriorated.
Mr. Gross said in his lawsuit that his Pimco career reached a breaking point when Mr. Ivascyn and other managing directors threatened to resign. He said in the suit that Mr. Ivascyn, who was named as a deputy CIO in 2013, was "foremost" among the individuals who sought to oust him as a way of collecting his share of the bonus pool.
Mr. Ivascyn declined to comment about his interactions with Mr. Gross. Pimco officials have disputed Mr. Gross's allegations.
Unnerved by the potential loss of Mr. Ivascyn and other key employees, Pimco parent Allianz intended to fire Mr. Gross. Mr. Gross quit on Sept. 26. 2014, and hours later Pimco named Mr. Ivascyn as the firm's next CIO.
Sarah Krouse contributed to this article
Write to Justin Baer at justin.baer@wsj.com
(END) Dow Jones Newswires
June 16, 2017 05:44 ET (09:44 GMT)