Coverage: Bond king Bill Gross is retiring

Bill Gross, the one-time bond king who built investing giant Pimco from the ground up 48 years ago then went on to run his own fund at Janus Henderson, announced his retirement Monday.

Jeff Cox of CNBC.com had the news:

The retirement, effective March 1, marks the end of an era, closing a career for a fixed income expert who once had the ear of policymakers in the highest places. After leaving Pimco, Gross was never able to regain the standing he once held, and the fund he ran for Janus Henderson had badly underperformed for most of the nearly five years he had been there.

“I’ve had a wonderful ride for over 40 years in my career — trying at all times to put client interests first while inventing and reinventing active bond management along the way,” the 74-year-old Gross said in a statement.

While at Pimco, Gross helped run the world’s largest mutual fund, the Pimco Total Return Fund, which once boasted nearly $300 billion in assets. The fund began to hemorrhage investor money amid a battle at the firm’s top between Gross and his co-CEO Mohamed El-Erian. Most recently, it was down to $65.6 billion in assets but has been outperforming its benchmark for the past three years.

John Gittelsohn of Bloomberg News reported that his Janus performance has not lived up to his Pimco days:

Gross, 74, has run the Janus Henderson Global Unconstrained Bond Fund since late 2014, shortly after he suddenly left Pimco in the midst of a management clash. His annualized returns of less than 1% at Janus failed to live up to his stellar long-term record from the Pimco era.

Responsibilities for the unconstrained bond fund and related strategies will be assumed by the team at Janus that has been supporting Gross for four years, according to the statement. Nick Maroutsos, co-head of global bonds, will become the portfolio manager of the fund as of Feb. 15.

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 go-anywhere fund lost almost 4% in 2018, sparking a stream 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, a position he eventually scaled back.

Sunny Oh of MarketWatch.com reported that Gross helped popularize the idea of actively managed bond funds:

Gross helped co-found Pimco in Newport Beach, Calif. as a spinoff from Pacific Mutual Life Insurance in 1971. From the West Coast, he helped introduce the concept of actively managed bond portfolios and broadened the world of fixed-income to a broader range of assets including mortgage-backed securities and interest-rate derivatives.

“I’m very proud of the innovative assets that we were able to move into like mortgages, financial futures and TIPS and so on, which is really the basis for performance in Pimco. I’ve had a great career. I’m proud of it,” said Gross, in an interview with Bloomberg TV on Monday.

Seen another way, the end of Gross’s career might serve as another marker of the twilight of active investing. At Pimco, he presided over its flagship Total Return fund, which, at its height, ballooned to nearly $300 billion in assets, becoming the biggest actively managed fund in the world.