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Friday, June 17, 2016

GMO and Pimco Slim Down

News summary by MFWire's editors

Doug Hodge and Jeremy Grantham are trimming their teams by more than 60 people each.

Sabrina Willmer of Bloomberg reports that Boston-based GMO [profile] is cutting about 10 percent of its 650-person workforce. Departing GMO executives, per Morningstar, include global equity chief David Cowan and global equity fundamental research chief Chris Fortson. Citing Morningstar, Bloomberg reports that GMO's AUM (now $99 billion) has fallen 20 percent in two years.

A spokesman for GMO declined to comment to Bloomberg.

News previously broke that GMO allocation and developed fixed income team co-head Sam Wilderman will leave at the end of 2016 and that CEO Brad Hilsabeck will step down at the end of this month. Hilsabeck will hand the overall reins to Peg McGetrick, who will serve as interim CEO, while Ben Inker will become the sole chief of the asset allocation and fixed income teams.

Meanwhile, a host of publications -- including Bloomberg, Business Insider, Dealbreaker, the Financial Times, the LA Times, the Orange County Business Journal, Pensions & Investments, Reuters, and the Wall Street Journal -- all picked up on an internal Pimco[profile] memo revealing a 68-person layoff, amounting to three percent of the Pimco staff worldwide. (That means, pre-cut, that Pimco had around 2,267 employees worldwide.) BusinessInsider and P&I both posted the full memo, which is signed "Dan, Doug and Jay", i.e. Pimco group chief investment officer Dan Ivascyn, Pimco CEO Doug Hodge, and Pimco president Jay Jacobs.

"Like any responsible business, Pimco constantly adjusts its resources to capitalize on changing markets and investment opportunities for clients," a Pimco spokesman told the pubs. "Our current business plans will reduce expenses in some areas while, of course, ensuring investment and hiring in others."

The Pimco memo reveals one specific group hit by the cuts: its dividend equity investing team, which is led by Brad Kinkelaar. Pimco is moving the active dividend strategies to smart beta specialist and longtime Pimco subadvisor Research Affiliates, while "the dividend team will be among the [68 people] ... who are leaving the firm."

Pimco now has $1.5 trillion in AUM, a 25-percent drop from its peak in Q1 2013 (a year and a half before founder Bill Gross famously left). The Newport Beach, California-based fixed income giant and Allianz subsidiary has been fighting layoff rumors at least as far back as September 2015. 

Edited by: Neil Anderson, Managing Editor

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