Gross begins second act as bond guru at tiny Janus fund

Sat Sep 27, 2014 8:08am EDT
 
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By Richard Leong

NEW YORK (Reuters) - For Bill Gross, quitting Pimco's $222 billion Total Return Fund to take over a $13 million fund at Janus Capital is like resigning the U.S. presidency to become city manager of Ashtabula, Ohio, population 18,800.

Gross stunned the investing world on Friday with his abrupt departure from Pimco, the $2 trillion asset manager he co-founded in 1971 and where he had run the Total Return Fund, the world's biggest bond fund, for more than 27 years.

Come Monday morning, Gross will join Denver-based Janus and next month will take over its Unconstrained Bond Fund, which was only organized in May. Janus is an asset management firm once known for picking hot Internet stocks.

"For Gross, this is a new slate albeit a small one," said Jeff Tjornehoj, senior analyst at Lipper Inc, a unit of Thomson Reuters.

Small may be overstating the Janus fund, at least in comparison with the Total Return behemoth. The relationship between the Janus Fund and the Total Return fund is the same as that of the population of Ashtabula with the population of the U.S.: 314 million.

At end of August, the Janus Unconstrained fund held only 45 debt issues with 70 percent of its assets in U.S. government debt. One Treasury issue due June 2016 alone was worth 43 percent of the fund's total assets. Most of the bonds have short durations, with the average maturity of just over three years, indicating a generally defensive posture.

The current managers of the Janus fund are head of fixed income Gibson Smith and portfolio manager Darrell Walters. It's billed to follow a strategy of "all-weather, credit-driven fixed income investing," according to Janus' website. (www.janus.com)

By comparison, the Pimco Total Return fund holds more than 6,000 securities, ranging from plain-vanilla Treasuries to complex credit derivatives. Forty-one percent of its holdings were in U.S. government-related securities with the rest spread among riskier debt, including mortgage-backed securities and corporate bonds.   Continued...

 
Bill Gross, co-founder and co-chief investment officer of Pacific Investment Management Company (PIMCO), adjusts his sunglasses as he arrives to speak at the Morningstar Investment Conference in Chicago, Illinois, in this file photo taken June 19, 2014.  REUTERS/Jim Young/Files