Mohamed El-Erian, chief executive officer and co-chief investment officer of Pacific Investment Management Company (PIMCO), surprised the investment world when he announced his resignation today from the global asset management firm with nearly $2 trillion under management.

Mohamed El-Erian Announces Exit From PIMCO

Mohamed El-Erian will leave PIMCO in mid-March as part of a “leadership overhaul,” Allianz SE (ADR) (OTCMKTS:AZSEY) (FRA:ALV) ( ETR: ALV), PIMCO’s parent company, said in a statement.  Douglas Hodge, the managing director and chief operating officer, has been named the new CEO.  El-Erian will stay on to advise Frankfort-based Allianz by sitting on its International Executive Committee and Gross will remain chief investment officer.

Mohamed El-Erian leaving at top of bond market?

With many market observers, including “Bond King” Bill Gross, touting the end of a 30 year bull run in bonds, the going might get rather difficult for PIMCO’s flagship product, the PIMCO Total Return Fund, which has $237 billion under management.  If Gross is correct, Mohamed El-Erian could be exiting from PIMCO at just the right moment in time.

Differing investment outlooks

The investment philosophies of Bill Gross and Mohamed El-Erian were a study in contrast.  As Gross lamented the future potential for bond appreciation, he began to dabble in aggressive alternative strategies.  The firm developed a quantitative division and launched a managed futures trend following mutual fund in 2013, among other initiatives.  Gross was known as the optimist with a new and aggressive push into alternatives with El-Erian was known as the “worrywart,” a term he gave himself in a piece he wrote on Project Syndicate in November of 2013.  In the piece Mohamed El-Erian voiced his well known concerns regarding US Federal Reserve intervention into the bond markets.

Mohamed El-Erian sees many potential triggers that can ignite the next global economic crisis, but his biggest fear is another too-big-to-fail bank failure, according to a report in MarketWatch.  “El-Erian warns that earlier bank bailouts did not trigger any needed reforms, so banks just reverted to their pre-2008 very bad habits, setting up conditions for another crash,” the report said.

Mohamed El-Erian first joined PIMCO in 1999 and was a senior portfolio manager, coming off a stint at Citigroup in London and before that he spent 15 years at the International Monetary Fund in Washington DC.  El-Erian briefly left PIMCO to join Harvard Management Company but then re-joined PIMCO in 2007.

In 2012 US President Barack Obama announced Mohamed El-Erian would become Chair of the president’s Global Development Council.  He is a regular contributor to various radio, television and print media.