Pimco fund hit by pullouts, infighting

[NEW YORK] BILL Gross, in an investment outlook in April entitled Man in the Mirror, questioned whether he was truly a great investor as he pondered his legacy in a new era of shrinking bond returns.

Almost a year later, his largest fund, the US$236 billion Pimco Total Return, is trailing rivals, prompting clients to pull money for 10 straight months, and the 69-year-old is entangled in an ugly split from his former heir apparent Mohamed El-Erian, 55, with allegations of phone surveillance and public humiliations - painting a picture of Mr Gross as an autocratic leader struggling to maintain his composure.

The departure of Mr El-Erian and other top executives in the past year has become a distraction at a critical time for Pacific Investment Management Co (Pimco's full name), the Newport Beach, California firm he co-founded in 1971 and built into the world's largest fixed-income manager amid a three-decade rally in bonds. As rising interest rates worldwide have prompted investors to flee bond strategies this past year, Mr Gross's ability to improve returns is crucial for Pimco to reverse client redemptions.