As PIMCO bleeds assets, Gross shows risk of star culture

Bill Gross' exit from Pimco has seen billions of dollars leave the fund group and even more value wiped off the share price of its parent company, offering a warning both to firms who rely on star managers and the investors who chase them. Gross's flagship Pimco Total Return Fund lost money every month from May last year, totaling nearly $70 billion by the end of August, Lipper data shows. With much of a mutual or hedge fund firm's value tied up in the brain power of its employees, as opposed to bricks, mortar and other hard assets, the loss of an important employee - known in the trade as "key man risk" - exposes the firm to asset flight which can even force it to sell holdings at a loss. From the corporate blow dealt to Invesco Perpetual after it lost high-performing fund boss Neil Woodford earlier this year to the investors forced to move after hedge fund Highbridge Capital closed its Asia fund when its regional head left in 2011, the risk is industry-wide and notoriously disruptive.

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