Bill Gross Is Retiring
Perhaps it was the stress of stuffing his ex-wife's air vents with dead fish, or simply the consistent inability to generate any alpha in his Janus Unconstrained Fund ever since departing Pimco in Oct 2014 in a scandal that rocked the asset management industry and led to a infamous schism between Gross and his former right hand man, Mohamed el-Erian, but whatever the ultimate reason, moments ago Janus announced that Bill Gross, who will be 75 in April, is finally retiring.
Gross, 74, had run the Janus Henderson Global Unconstrained Bond Fund since late 2014, however his annualized returns of less than 1% at Janus "failed to live up to his stellar long-term record from the Pimco era" as Bloomberg diplomatically put it.
And speaking of Bill's reasons to retire, Bloomberg is quick to point out that Gross' Janus Henderson Global Unconstrained Bond Fund had another $60 million of redemptions in December, dropping assets to under $1 billion, and marking the 10th consecutive month of outflows.
In 2018, the unconstrained fund lost almost 4%, sparking a waterfall of investor redemptions that drove assets below $1 billion from the peak of $2.24 billion early in the year. Gross, who in September 2018 reduced his own stake in the fund, had blamed losses during the year’s first half partly on a misplaced bet that rates on U.S. Treasuries and German bunds would converge, apparently failing to account for hedging costs as we explained previously.
The billionaire money manager started his latest chapter with fanfare, compared by Janus Chief Executive Officer Dick Weil to Super Bowl-winning quarterback Peyton Manning, “that game-changing level of talent.” Gross poured $700 million of his personal fortune into the unconstrained fund, but he failed to attract much outside money and his performance relative to peers deteriorated each year.
“The sort of underperformance we’re seeing is challenging and disappointing to him more than any of us,” Weil, whose firm is now based in London, said in a Bloomberg Television interview last August.
In the statement Monday, Weil said: "Bill is one of the greatest investors of all time and it has been my honor to work alongside him. I want to personally thank him for his contributions to the firm.”
When Gross joined Janus, he knew time was limited to prove he retained his market mastery.
And sadly for the investing legend,his time has now run out, which is disappointing because At Pimco, Gross racked up one of the longest winning streaks of any money manager. The Pimco Total Return Fund, which he founded in 1987, became the world’s biggest mutual fund as assets swelled to almost $300 billion at its 2013 peak, generating annualized returns of 7.8 percent from inception through his last day.
As Bloomberg notes, Gross drove himself obsessively. A former devoted long-distance runner, he once raced from San Francisco to Carmel, California, and became hospitalized with kidney damage.
Pimco’s assets swelled after the 2008 financial crisis, when the Total Return Fund and other accounts produced gains even as stocks plunged. But a few years later, his performance wobbled. Total Return lagged peers in 2011 and again in 2013, exacerbating friction between Gross and colleagues. In early 2014, CEO and Co-CIO Mohamed El-Erian quit.
Gross sought to weed out managers he suspected of disloyalty, spurring executives at Pimco’s parent, German insurer Allianz to intervene. Gross eventually jumped ship before he could be thrown overboard. On Sept. 26, 2014, he left a handwritten note announcing his resignation as of 6:29 a.m. Pacific time – one minute before New York markets opened. Investors withdrew hundreds of billions of dollars, little of which followed Gross to Janus Capital, as the firm was known before its 2017 merger with Henderson Group.
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“No other fund manager made more money for people than Bill Gross,” Morningstar Inc. said in January 2010, when it named him fixed-income manager of the decade.
Alas, not even Gross had any idea how to navigate the "new normal" in which not fundamentals or logic, but central banks were in charge of everything.
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Look up the divorce process with this guy. Funny!
Of course he is retiring since the bond market has nowhere to go but down (value-wise) and up in yields.
PIMCO was a huge 'help' to the FRB in keeping rates low when it worked with them to house major positions of the offloaded bond market.
Cap 2 is addition to article as it illustrates what is going on a bit better with adding the FRB tightening process to it.
https://www.zerohedge.com/news/2019-02-04/bill-gross-retiring-after-dismal-janus-bond-performance