Bill Gross leaves PIMCO for Janus Capital

Legendary bond investor Bill Gross is leaving the $2 trillion investment firm he founded to join a much smaller company called Janus.

Janus announced Friday that Gross, who helped found Pacific Investment Management Company, LLC (better known as PIMCO) in 1971. Over the past 40 years PIMCO has grown to become the largest bond fund on earth.

"I chose Janus as my next home because of my long standing relationship with and respect for CEO Dick Weil and my desire to get back to spending the bulk of my day managing client assets," Gross said in the statement.

Gross's departure is the second unexpected exit from PIMCO in recent months, as the company's former No. 2 Mohamed El-Erian left the firm earlier this year to spend more time with his family although the two had been reportedly publicly and privately clashing before that.

Sudden move

Although not a household name with the population at large, Gross is a towering figure in the bond market, which is worth something in the neighbourhood of $85 trillion, far and away larger than all the stocks on earth combined.

"When you look at the investable bond market in Canada, it's over $1 trillion," says Noel Archard, the head of bond firm Blackrock Canada.

Relatively few Canadians likely have any direct exposure toPIMCO, but activity in the bond market that firm dominates dictates the rates offered to consumers on loans and mortgages. And literally every Canadian worker also has exposure through Canada's national pension plan, which keeps about 25 per cent of its $220 billion worth ofinvestableassets in bonds.

The surprise announcement, which rattled global stock and bond markets, comes just days after news broke that U.S. securities regulators were investigating PIMCO and Gross in connection with an exchange-traded fund he managed at PIMCO.

A source familiar with the matter told Reuters that Gross had been clashing with the firm's executive committee and had threatened to quit multiple times. But the Wall Street Journal reported Friday that the company was preparing to fire Gross.

In a statement, PIMCO saidthat it had a succession plan in place and that its management board would confirm a new chief investment officer shortly but declined to name who that might be.

"While we are grateful for everything Bill contributed to building our firm and delivering value to PIMCOs clients, over the course of this year it became increasingly clear that the firms leadership and Bill have fundamental differences about how to take PIMCO forward," PIMCO'smanaging director said in a terse statement.

Shares in Allianz, the German insurance conglomerate that controls PIMCO, sank more than five per cent in Germany following the news, while Janus surged more than 35per cent in New York.