Bond guru Bill Gross suddenly bolts PIMCO for Janus

Leaves SEC investigation behind?

Janus Capital Group [JNS] today announced that William (Bill) Gross, world-renowned fixed income investor, will be joining Janus Capital Group.

Gross recently headed investments at PIMCO, a company he co-founded with Jim Muzzy and Bill Podlich, the largest private bond trader in the nation with $1.97 trillion in assets under management as of June 30, 2014.

The timing of his departure is very interesting.

According to an article in Reuters, published two days ago:

"U.S. regulator the Securities and Exchange Commission is investigating whether bond fund manager Pimco inflated the returns of its Total Return Exchange-Traded Fund, run by founder Bill Gross, who has come under renewed fire from investors this year over the poor performance of his main fund."

Pimco confirmed the departure:

PIMCO, a leading global investment management firm, announced that Co-founder and Chief Investment Officer ("CIO") William H. Gross, has resigned and will leave the firm, effective immediately. The firm has a succession plan in place and its Management Board, comprised of its Managing Directors, will confirm shortly the election of a new Chief Investment Officer. Relevant portfolio management assignments will also be announced at that time.

According to CEO Douglas Hodge: "While we are grateful for everything Bill contributed to building our firm and delivering value to PIMCO's clients, over the course of this year it became increasingly clear that the firm's leadership and Bill have fundamental differences about how to take PIMCO forward."

Business Insider this morning published an article highlighting the massive losses at Gross' PIMCO fund in the last year. Ben Walsh, business reporter for The Huffington Post took to Twitter to call the fund's performance "scary."

Gross seemed unfazed and even went on stage, at an industry luncheon, wearing sunglasses while the song "Smooth" played.

As news of Gross' departure began to funnel through the industry, reports began to surface that Gross' behavior of late had begun to be an issue.

Gross will manage a recently launched Janus Global Unconstrained Bond Fund and related strategies, Janus said in a statement.

Gross’ employment will be effective September 29, 2014.

“[Gross'] involvement provides Janus a unique opportunity to offer strategies and products that are highly complementary to those already managed by our credit-based fixed income team,” said Richard M. Weil, Chief Executive Officer of Janus Capital Group. “With Bill leading our global macro efforts and Gibson our credit-based fixed income team, I am confident Janus will be able to meet the needs of virtually any client.”

Gross will be based in a new Janus office to be established in Newport Beach, California and will be responsible for building-out the firm’s efforts in global macro fixed income strategies. His concentration on such strategies will be separate and complementary to Janus’ existing and highly successful credit-based fixed income platform, built under the leadership of Janus’ Fixed Income Chief Investment Officer, Gibson Smith.

“I look forward to returning my full focus to the fixed income markets and investing, giving up many of the complexities that go with managing a large, complicated organization,” said Gross. “I chose Janus as my next home because of my long standing relationship with and respect for CEO Dick Weil and my desire to get back to spending the bulk of my day managing client assets. I look forward to a mutually supportive partnership with Fixed Income CIO Gibson Smith and his team; they have delivered excellent results across their strategies, which deserve more attention.”

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