Neel T. Kashkari, who joined Pacific Investment Management Co. in December 2009 to help oversee an expansion into equities, said he's leaving Bill Gross' firm to consider returning to public service.
Mr. Kashkari, who previously was a senior adviser to former Treasury Secretary Henry Paulson before joining PIMCO and serving as head of global equities, announced his departure in an e-mailed statement Wednesday. He directed recipients to his website, which said he's reaching out to leaders in communities across California to hear their ideas, share his own, and explore how he can best effect positive change in the state.
Mr. Kashkari's departure is a setback for PIMCO, which has been seeking to reduce its dependence on the fixed-income market and adding equities in anticipation that the three-decade bond rally that fueled the firm's growth might come to an end. PIMCO's equity unit has attracted about $10 billion in assets since the first fund was opened in April 2010, accounting for less than 1% of the firm's $1.9 trillion in assets.
“It is a blow to PIMCO,” Geoff Bobroff, a mutual fund consultant based in East Greenwich, R.I., said in a telephone interview. “Bonds aren't going to return what they have over the past 10 years. To the extent you are going to attract investors, it is going to be more difficult unless you have an equity capability.”
Mr. Kashkari, a former investment banker at Goldman Sachs Group, was tapped by Mr. Paulson in 2008 to oversee the $700 billion Troubled Asset Relief Program. He resigned from that role in 2009.
“Leaving is not an easy decision because our equity business is off to a great start,” Mr. Kashkari said in the e-mail. “Nonetheless, my passion lies in public service.”
PIMCO's first equity fund was the $2.2 billion EqS Pathfinder Fund, followed by the $600 million EqS Emerging Markets Fund in March 2011. The Pathfinder fund has returned 9.1% over the past 12 months, trailing 91% of peers, according to data compiled by Bloomberg. The emerging markets fund returned 7.6% over the past year, behind 81% of peers.