Gross’s Unconstrained Fund Cut From Morningstar ‘Prospects’

Ted

FYI: Bill Gross’s Janus Global Unconstrained Bond Fund was removed from a list of up-and-coming strategies compiled by Morningstar Inc. because of performance and questions about the fund’s management, the Chicago-based researcher said Tuesday.
The fund was taken off the list “because returns have been so-so versus major bond indexes, and there are questions about the resources behind Gross following the removal of Kumar Palghat as the co-manager,” Morningstar said in a note about its third-quarter 2016 prospects list.
Regards,
Ted
http://www.bloomberg.com/news/articles/2016-11-08/gross-s-unconstrained-fund-removed-from-morningstar-prospects

msf

There would seem to be questions not only about resources behind Gross, but about Gross spreading himself out as well. It seems he has his eye on starting up another total return bond fund.

http://riabiz.com/a/2016/11/3/bill-gross-jumps-back-in-the-total-return-game-first-with-a-one-client-100-million-sma-he-tells-pi-but-with-a-mutual-fund-on-the-way

VintageFreak

Why? He ran so many funds at PIMCO. That time no one suggested he was being spread thin. Now he will have just 2 funds, and we are concerned?

Sorry. Does not compute.

msf

The original column expressed concern about Gross not having enough resources to manage one fund, let alone more. Perhaps he could manage many funds if they all had teams of analysts behind them, but the point of the column was that he already needs to devote his full attention on his current Janus fund. Taking on more responsibilities without that support would be spreading himself thin.

The column I linked to supports this thesis (albeit without substantiation), saying that Gross' success with PTTRX was largely due to the PIMCo team and resources. These are lacking at Janus; Gross is somewhat on his own in Newport Beach.

Nor does Gross want to be involved in building a team. When he joined Janus, he said "There is a team in place already" and as "an investment guy [] the other stuff - hiring, paying people, planning, and so on - became a problem for [him at PIMCo]".

Setting up a new fund and building a team is going to be a significant distraction for someone who finds these tasks problematic at this point in his career.

Sven

I agree with msf assessment. Historically Pimco's strength is in the debt area and the backroom (analysts) support is significant to run a wide range of strategies. Because of that that small shop in Newport, CA grew to one of the largest firm over the last two decades. With that level of support, it also allowed him to be the spokesman for Pimco. Toward the end of Gross tenure at Pimco, the problem of large asset base finally caught up with him.

Janus, on the other hand, is the opposite to Pimco where they are mostly known for equity investment. The under-performance of Gross fund to its benchmark is due to lack of support. It is highly unlikely for Gross to build a support equivalent to Pimco in less than 10 years. So it should be surprise the Unconstrained fund is not so well even with much smaller asset base.