DOW JONES NEWSWIRES
Bond king Bill Gross will take over the day-to-day management of
the Pimco High Income Fund (PHK) effective immediately.
Pacific Investment Management Co., which Gross founded in the
early 1970s and of which he remains co-chief investment officer,
didn't say in a statement why the move was being made. A
spokeswoman for Allianz SE (AZ), which owns Pimco, wasn't
immediately available for comment.
The closed-end fund was walloped last year, with returns of
-48.8%. Returns were -30.5% in the past 52 weeks through Thursday
but were a positive 47.3% year-to-date.
The High Income Fund uses leverage to amplify returns, with
generating income the primary investment objective. High-yield
corporate bonds are a key holding as they have a higher interest
payment but increased risk. Defaults on junk-rated debt has surged
for the past year as issuers have run into increased difficulty in
servicing and/or refinancing debt.
The High Income Fund was also one of several Pimco closed-end
funds that ran into trouble paying dividends early this year
because of the falling value of auction-rate securities. Pimco
agreed to repurchase several hundred million dollars of the
securities so the dividend payments could resume. The buyback was a
reversal for Pimco, which had refused to redeem the securities for
months after the auction-rate market froze up last year.
The fund, which has about $750 million in assets, had been
managed by Mark Hudoff, who joined the company in 1996 and has been
heading Pimco's European team and its global high-yield
products.
-By Tess Stynes and Kevin Kingsbury, Dow Jones Newswires;
201-938-2473; tess.stynes@dowjones.com