Ford Drops Pimco - Who's Next?

Reuters reported Tuesday that Ford Motor Company F is dropping the Pimco Total Return Fund from its 401k plan.

According to the report, Ford explained that “This decision was made after the recent resignation of Bill Gross, Pimco's chief investment officer and portfolio manager. If interested, employees can transfer out of Pimco Total Return Fund at any time prior to Nov. 14.

Ford’s decision comes after Reuters also reported that the Pimco Total Return Fund had $23.5 billion in net outflows for September, part of a 17 month streak of outflows.

Even if Pimco’s management is above reproach, the news of Bill Gross’ departure may be creating an adverse feedback loop, similar to a bank run, where each report of an outflow creates more concern and then more outflows.

The reflexive nature of the problem naturally leads to concerns over who may be next to drop Pimco.  Monday, Bloomberg reported that Pacific Life Insurance Company is moving its some of its assets from Pimco to Janus Capital Group, where Gross now works.

As of late Tuesday, Pimco had not commented on the news.