[PIMCO CEO Doug Hodge.] Pimco, the giant investment firm, is cutting jobs and closing six funds worth $260 million in assets. The cuts amount to 68 jobs, or about 3% of the workforce, according to an internal memo that just went out. Here are the main takeaways: * The dividend team will be let go, as the firm converts its equity exposure from its active "dividend" strategy to the "research affiliates equity income" strategy. Pimco says this will lead to more consistent performance and lower the risk profile of the funds. * Brad Kinkelaar, who was the portfolio manager on the dividend strategy, is leaving. * The changes are also being made because of changing investor demand for different investment products, with an increase in demand for Pimco's nontraditional strategies. * Eligible employees in the US will be offered voluntary severance. In a separate statement, Pimco said that it is closing six funds that represent less than 1% of the firm's equity strategy assets. Pimco manages about $1.5 trillion. The news comes as Grantham Mayo Van Otterloo & Co. also announced job cuts of about 10% of its 650-person staff, Bloomberg reported. GMO has seen its assets drop about 20% over the past two years, to $99 billion, according to the report. We'll update this story as we get more information. In the meantime, here's the Pimco memo in full: _Colleagues,_ _Earlier today the Executive Committee directed a series of steps to ensure that our business is better structured to serve our clients in this fast-changing asset management industry landscape. We want to share this news with you now that we have connected with our colleagues who are affected._ _As a primary step, we have taken the difficult decision to reduce our headcount by 68 people. We have always strived to hire top talent, so those who are now leaving are colleagues who have given tremendously to PIMCO and our clients. We pride ourselves on being a lean organization with a special culture, so that only makes this decision even more difficult and personal for us as a firm. While this reduction represents just 3 percent of our workforce, the changes are especially painful given the close bonds that all of us forge with one another as colleagues and friends. We thank all those who are leaving for their many contributions and we will miss them._ _Secondly, we will be offering voluntary severance to eligible employees in the US. Those eligible will be contacted later today by HR. Separation terms will be determined by reference to local custom and regulations._ _Finally, we have decided to restructure our active Dividend strategies by converting the equity exposure to Research Affiliates Equity Income (RAE Income). While our Dividend team colleagues have made important contributions to the firm, we believe this conversion is a better outcome for clients as we seek consistent performance with a lower risk profile, while delivering on the objectives of high current yield and long-term capital appreciation. As a result, the dividend team will be among our colleagues referenced above who are leaving the firm._ _Here is why we are taking these measures: We remain committed to first caring for the assets that clients have entrusted to us. We also see growth potential in a range of areas including alternatives, private credit, solutions, client analytics, and regionally in many parts of the world, not to mention the increasing investor demand for many of our non-traditional strategies. We know that the role of active management has never been more important to client portfolios. The competitive demands of this industry require that we continually adapt and innovate to meet evolving client needs. Therefore, everything we do is focused on providing investment performance, innovative solutions for clients and outstanding client service._ _Of note, as we collectively move forward as a firm, we will continue to build out teams and hire the best talent globally and manage our staff levels through attrition, hiring, repositioning of resources and through promotion and compensation. We have undertaken an extensive benchmarking exercise this year to compare our compensation with competitors and will use this to remain a top payer in our industry._ _Taking these actions today positions all of us for the future. We will use our substantial resources to invest in you and add to our already remarkable talent where necessary._ _Today is a difficult day for all of us at PIMCO, but most importantly, for those affected by these decisions. The firm is providing support to those affected and we thank them again for their contributions._ _We thank you all for your continued commitment to our clients and the firm as we move forward._ _Dan, Doug and Jay_ Join the conversation about this story » NOW WATCH: FORMER GREEK FINANCE MINISTER: How I dealt with stress when Greece nearly defaulted
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