Bill Gross’s bond fund hit by wave of investor redemptions
Legendary manager now oversees $1.2bn, compared with $300bn during peak at Pimco
Bill Gross, once renowned as the world’s top fixed-income manager, has seen his fund fall in value by 40 per cent this year as investors abandon the one-time “bond king” following an extended period of weak performance.
Investors have withdrawn $834m from the Janus Henderson Global Unconstrained Bond fund, which now manages just $1.2bn, according to Morningstar, the data company.
The latest outflows mark a fresh low point for a manager who once controlled a $300bn bond fund, the world’s largest, when he was employed by Pimco.
“It is not surprising that he has not been able to attract the staggering levels of money he managed at Pimco,” said Randy Waesche, chief executive of Resource Management, a financial advice group. “Investors do not flock to funds that consistently lose money.”
Mr Gross’s fund has now dropped to last place in Morningstar’s non-traditional bond fund category after recording negative returns of 6.5 per cent in the first seven months of the year.
Bond funds have been ravaged this year as investors have fled in response to rising interest rates. Several top-selling funds from 2017 have haemorrhaged cash in the first six months of the year.
It is unclear how much of the $1.2bn Mr Gross manages is on behalf of external clients. He personally invested $700m in the fund when he started running it four years ago.
Mr Gross has been on the wrong end what he has called the “trade of the year”, betting that German government bond prices will fall as US Treasurys rise. His fund also lost more than 3 per cent in value on a single day in May as fixed-income markets were rocked by the Italian financial crisis.
Dick Weil, who recently become sole chief executive of Janus Henderson, this month told CNBC that Mr Gross had “made some bad bets”.
Mr Weil, a former Pimco executive who was instrumental in bringing Mr Gross to Janus Capital in 2014, said at the time: “He believes still in his basic presumption that inflation is not going to get out of control. And so he hasn’t lost faith in his fundamental view. But he’s been wrong and wrong badly in the short term. And he’s accountable and we’re accountable for that.”
Mr Waesche added: “Mr Gross will be remembered as one of many talented investment advisers that did well for a time, but ultimately lost to the vagaries of the market.”
George Soros was one of Mr Gross’s early backers at Janus, but pulled $500m from the fund in 2015 as losses began to mount.
Janus Henderson did not immediately respond to a request for a comment. The fund’s flows and performance data were first reported by Ignites, an FT news service.