By Justin Baer
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)
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