El-Erian to become sole CEO of bond titan Pimco

Bond fund giant Pimco on Thursday said Mohamed El-Erian would take over as sole chief executive of the company at year’s end, cementing his position as one of the world’s most influential financial executives.

El-Erian, 50, will be alone at the top of Newport Beach-based Pimco, after sharing the reins as co-CEO for nine months with Bill Thompson, who has led the company for 15 years.

Thompson, 63, had agreed in January to stay on for five more years. But he said he decided to retire because he believed that "CEOs shouldn’t stay too long at the party."

He also said he believed that El-Erian was "uniquely qualified" to lead the money management firm, which has mushroomed to $840 billion in client assets and 1,000 employees from $40 billion and 125 employees when Thompson became CEO in 1993.

El-Erian’s ascension was virtually assured after he returned to Pimco in January after less than two years as head of Harvard University’s $35-billion endowment fund. Before taking the Harvard job, El-Erian had been one of the rising stars among Pimco’s fund managers. He joined Pimco, short for Pacific Investment Management Co., in 1999.

The New York-born son of an Egyptian diplomat, El-Erian holds an Oxford economics degree and is fluent in Arabic, English and French. Before his first stint at Pimco, he spent 15 years with the International Monetary Fund, a lender to developing nations. At Pimco he racked up hefty returns managing the company’s emerging-market bond portfolios.

El-Erian was at a company conference and wasn’t available for comment today, a Pimco spokesman said.

Pimco is best known to many investors for its Total Return fund, which with $130 billion in assets is the world’s largest bond mutual fund and is a common investment option in retirement-savings plans. The fund is managed by Bill Gross, 64, who also is chief investment officer of Pimco -- a title El-Erian also shares and will continue to share, Pimco said.

The company, majority-owned by German insurance titan Allianz, has long encouraged its fund managers to have strong views on market trends and to invest accordingly. More than a year ago, Pimco was vocal about the threat the nation faced from years of mounting debt and speculation in the housing market and on Wall Street.

Gross -- frequently heard on CNBC -- over the last year has been insisting that the federal government would have to take a larger role in saving the economy and financial system from the housing crash. His critics say Gross is trying to protect Pimco portfolios that are heavy with bonds of troubled mortgage companies Fannie Mae and Freddie Mac.

Gross today reiterated his views on the need for a larger federal role in his monthly commentary on the firm’s website, here.

Photos: Mohamed El-Erian (top) and Bill Thompson (bottom)

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[Janis Dinwiddie]

Mr. El-Erian will be speaking at the Newport Beach Central Library next March 13-14, as part of the Library Foundation's annual Distinguished Speakers Lecture Series. For more information, please email: info@nblibraryevents.com.