October 9, 2014 / 3:58 PM / 3 years ago

Bill Gross, in his 'second life,' says Janus role is simpler

5 Min Read

Bill Gross, co-founder and co-chief investment officer of Pacific Investment Management Company (PIMCO), speaks at the Morningstar Investment Conference in Chicago, Illinois, June 19, 2014.Jim Young

NEW YORK (Reuters) - Bill Gross, in his first public appearance since his shocking departure from Pimco, said there will be more flexibility in managing less money at Janus Capital Group Inc JNS.N, but said he was disappointed over being forced to leave Pimco.

"I want to return to a simpler role, completely focused on markets, investment performance and serving my clients," Gross said in a letter released just after a webcast discussion conducted by Janus CEO Dick Weil. "It seems like a good time to turn away from the complexity of helping to run a huge firm."

Gross, one of the bond market's most renowned investors, quit Pacific Investment Management Co for distant rival Janus on Sept. 26. According to two sources familiar with the matter, he was expected to be fired the next day from the firm he helped launch more than four decades ago and built into a $2 trillion investment powerhouse.

"Had there been a reasonable way to continue there, I would have stayed to my last breath," Gross said in his letter, of Pimco. "I was honored by the trust of the millions of clients and thousands of employees over decades. They have been the center of my life's work."

Gross told Weil during the 30-minute webcast: "I think in terms of Janus Capital, like any successful marriage, we sort of chose each other."

Gross' Janus Global Unconstrained Bond Fund (JUCAX.O) attracted $66.42 million in net inflows in September, increasing its assets more than six-fold last month when Janus announced he was joining the Denver-based firm.

Gross took the fund, which was launched in May, earlier this week. Total assets rose to roughly $79 million at the end of September, a jump from $12.86 million at the end of August.

Gross was reflective about his management of the Pimco Total Return Fund, the world's largest bond fund, which at its peak in April 2013 had nearly $293 billion in assets. Weil asked Gross about the transition from managing billions of dollars to millions of dollars.

"Well, I speak from inexperience, but I would surmise that the biggest difference would be the flexibility in the smaller size," Gross told Weil. "There's no doubt that hundreds of billions in terms of a portfolio limits flexibility."

Since his departure, Pimco has seen heavy outflows, with $23.5 billion leaving the flagship Total Return Fund, which Gross managed, in September alone. In the last year and a half of his tenure, the fund had suffered steady outflows as its performance trailed the market.

"It is, from the standpoint of human nature, better to grow than not to grow, and so you’re hopeful, I'm hopeful that Janus Capital will grow," Gross said. "But it's at a size now that, certainly relative to my past, makes for a much more effective ability to put together a portfolio and to change it as circumstances change."

Gross reiterated his gloomy view on the global economy.

He said the Federal Reserve must be cautious and will likely raise interest rates slowly and stop at 2 percent sometime in 2017. Gross said the U.S. and other major economies are highly leveraged with structural headwinds including demographic and technology influences, which lower real growth.

As for investment opportunities, Gross said on the webcast that he likes Mexico.

"Mexico, it's an interesting situation from the standpoint of its economy. It's got half the debt that the United States does. It's got higher interest rates, higher real interest rates than the United States."

He added: "It's still associated with an emerging, developing type of economy but it's close to the United States, and it's getting close to growing up into developed space."

Gross, who recently underwent a minor surgical procedure on his face and wore a bandage under his right eye, said: "It has been a rough few weeks, it's going to be a better few months and few years going forward. I expect to live a happy second life at Janus."

A Janus spokesman would not elaborate on the bandage, saying only that "everything is OK" with Gross.

Editing by David Gaffen and Matthew Lewis

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