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I bought some JUCDX today in a Janus IRA. Will be interested to see how Bill Gross does in managing the portfolio going forward. Future inflows into the fund could help the performance.
To each their own, but I am selling remaining Pimco funds. As for Arnott's funds, I am concerned about the amount of outflows from the Gross-managed funds within and general Pimco turmoil.
Maybe I'm reading too much into this paragraph from the PR, but it doesn't seem to me that Gross will have anything to do with JUCDX:
Mr. Gross 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.
JUDCX is run by Gibson Smith (and Darrell W. Watters).
Gross' star value could pull money into all of Janus' bond funds even if he has nothing to do with them, so you still might see that boost in inflows.
(My error in mentioning this fund/share class in an earlier post I made to this thread; I was following up on another post that described this fund as a load fund.)
Edit Definitely not having a good day. My error, again. Thanks to JohnChisum for pointing out that Janus quickly changed the name of the fund. So it seems Gross steamrolled Smith. Here's the SEC filing, dated today, short and sweet (fund name changed, Gross in as manage, Smith and Watters out): http://www.sec.gov/Archives/edgar/data/277751/000095012314009838/d31178e497.htm
The filing says that it is effective Oct 6th. Janus is just going ga ga. On its list of bond funds, it no longer lists Unconstrained Bond Fund, but does list Global Unconstrained Bond Fund, which legally doesn't exist for another ten days.
When you follow the link to the fund, you see at the top a parenthetical remark that the name change is not effective until Oct 6th. The actual, legal, current name of the fund (no Global) only appears way down on the page. The links to the documentation don't include the prospectus update that I linked to above. All of this says that this is a rush job. (Just as M* rushed in removing its "Gold" rating from the PTTRX summary page, but left it on other pages for the fund, e.g. Filings.)
Gross is featured prominently at the head of the page, and it is only when you scroll down that you see the current managers.
I'm not going to, but I think at some point Janus becomes a good short if it keeps going even higher as a result of this. I think Gross has a remarkable long-term track record, but after everything that has gone on recently, I think he'll have to really make a comeback with the Janus fund.
"Instead, Kass says he is buying into Oaktree stock, on the basis of their 22% ownership stake in DoubleLine Capital—which was also in talks with Gross, Jeff Gundlach confirmed this morning. “At $50/share, Oaktree’s stock is well off their early 2014 high of over $62 and, arguably possesses the best management team in the industry,” Kass says."
I concur about the value to Janus being overrated. If I may slow down a bit here, and try to be a little more analytic:
Gross does have an outstanding 10 year and longer record, which various reports have pointed out. Whatever the management complaints have been, he did build a solid company, and I expect the PIMCO funds to perform reasonably well going forward as a result.
Grundlach did way better than TGLMX when he first left TCW, though over the past three years he has not done quite as well. In other words, TCW has held its own. But TCW had to buy MetWest to get that performance - too many people left TCW. I'm not expecting PIMCO people to leave and follow Gross.
Another analog, ironically enough, is Tom Marsico. Janus did just fine without him for about three years, at least until the .com bubble burst. So I suppose it's hard to tell how much credit to attribute to the organization, and how much to the manager.
I've focused on Gross' five year performance for a few reasons - it shows that his performance (to the extent that the PIMCO funds reflect his management) is variable and subject to long spells of mediocrity.
More important is that Gross has been promoting the New Normal (and now the New Neutral) for approximately five years (since May 2009). In other words, Gross has been saying that "this time is different". He's not done well throughout his self-declared new period, even though he's done well for many years before.
Either he's right, and we should be judging him based on how he handles this new investing environment, or he's wrong, which does not bode well for someone who invests on macro trends.
While he has been in the business for four decades, he didn't start managing retail funds (actually institution class funds) until 1987, well past the era of rising rates. So for him (and for nearly all managers) this time is different. I haven't been able to find any data on his involvement with separate accounts prior to that.
The more I think about his star value to Janus, the more I wonder about that as well. He's leaving a fund where people have been selling off for 16 straight months. I suppose that means that 3/4 of the money was still betting on him, or it could simply be sticky money that will stay with PIMCO because of inertia. And the $70B or so that flowed out is not likely to jump in with him at Janus.
Janus gets tons of free PR. Beyond that, I'm not sure what value they're getting in the long term.
Can't stand the "Alphabet Soup" of mutual fund share classes, and the marketing/sales of funds with loads. If they want to have a retail share class and an institutional share class, that's more than enough.
The only manager at Janus worth his salt is Gibson Smith. He has been Janus' bond "king". This development bears watching. I cannot imagine Gibson Smith is happy.
In some corporate circles they would tell you that you have to be a team player. Never mind that knife sticking out of your back. I've been there.
I wish him well whatever happens or wherever he goes. Earlier in their haste to announce the arrival of the bond King, Mr. Smith's photo was replaced with one of Bill Gross. Haste or an ominous sign? Since then his photo has returned.
This may also depend if Bill is planning on bringing over some friends from elsewhere too.
This is what happens when you have fund families that try to sell funds through all channels - traditional (load-based) advisors, wrap accounts, direct retail, supermarket, retirement plan, and institutional. Three families come to mind - Janus, PIMCO, and American Century. I'm sure there are others.
Anyway, though Janus uses a couple of unconventional letters for some of their share classes, the classes you listed follow these basic channels:
traditional load - A, C (front load, level load) D - direct retail sale (no 12b-1 fee, but 0.12% admin fee, for bookkeeping) I - institutional (no admin/12b-1 fees) N - retirement (no admin/12b-1 fees) T - supermarket (0.25% admin fee) S - wrap accounts (0.25% admin fee, plus 0.25% 12b-1 fee)
Some more common designations are Inv(estor) for directly sold noload shares, Adv(isor) for wrap or supermarket shares.
Many families use R to denote retirement class shares (or just use I shares w/o creating a different share class).
Usually, fund families use the same share class for more than one channel, which is why you don't often see as many as seven (or eight, with B shares) different classes.
(I'm not going into families that charge different fees depending on how big the account is - notably American Funds; but also Vanguard with Investor/Admiral, Institutional/Institutional Plus, Signal, ETF. These are just a couple of the more obvious families.)
For all this confusion, one nice thing about Janus is that if you're buying on your own, you only have to worry about T class (unless you're one of the grandfathered investors buying directly from Janus, in which case you just look at D shares). You don't have to think about multiple share classes.
Bill will help us build out a new Global Macro Fixed Income business and he will be named the Portfolio Manager of the recently launched Janus Global Unconstrained Bond Fund
With a current E.R. of 96 bps and 08-31-14 net assets of $12.9 Million. Holdings and Details
Footnote: Effective October 6, 2014, the Fund's name changes from Janus Unconstrained Bond Fund to Janus Global Unconstrained Bond Fund with the transition of the Fund to William Gross
There are a few reasons I bought JUCDX- 1) Bill Gross will be managing a very small amount at first which will give him a lot of flexibility to take advantage of smaller inefficiencies in the fixed income markets. Jeff Gundlach has pointed this out. 2) There will almost certainly be significant inflows for quite some time. If Gross buys into some less liquid areas of the bond market the new money can cause "self propelled" performance as Gross continues bidding up prices of existing positions.
Gibson Smith is also a good manager and has done a good job with JANFX ($7 Billion in assets). He already has a lot on his plate. If Janus gets inflows across the board in fixed income, he will be very busy. JUCDX was a very small part of his responsibilities at Janus.
I think the mandate of the "unconstrained bond" funds - global or otherwise - is changing so that Gross runs it. As long as Gibson does not feel sidelined, things should work out. Not sure if how many funds one manages defines one's compensation at Janus. Besides Gibson Smith must also be paid in Janus stock, which has already gone up. So I can't see him complaining too much.
Perkins, Gibson and now hopefully Gross are needed to lend some credibility to Janus. For their own sake, I hope they know WTF they are doing.
In 2007 Bill Gross saw things most of us missed in 2007ish. His failing, if he has one, was under estimating the length the Fed was willing to go to unwind the situation.
BONG HiTS 4 BILL GROSS! (excerpts from 2007 Pimco Insight publication):
"Up to 30 percent of Pimco's assets could now leave the firm, Sanford Bernstein estimates. "
Would that be the 30% give or take that left Pimco Total Return ($292B to $221B in the 16 months ending 8/31) because Gross was managing it, or the 30% that may leave because he will no longer be managing it?
As the article points out, people look not only at the name but at the performance. When Gundlach left TCW, he was at the top of his game; Gross has been at best mediocre for several years. So what I expect to see in columns is evidence of confirmation bias - each writer will read into the numbers whatever he or she wants. It won't be easy to sort out the root causes of money movement, and the financial "reporters" won't even be trying.
My own personal bias is that I believe good performance (to the extent it is based on skill) is due to a combination of skills of the whole team - analysts as well as the fund manager(s). They serve different roles all of which are needed. Gundlach took a good chunk of his team with him (or so I understand). I don't expect Gross to have as much success with that.
I look at Mutual Series - many people expected it to fall apart after it was acquired by Franklin and Michael Price gradually faded away then left. But the funds performed quite admirably, especially in the first several years after the Price era. The organization seemed to hold together.
And speaking of Mutual Series, how did another wonderkind fare - David Winters? He was supposed to do great things and draw all sorts of money. His fund has subpar performance. He has drawn over $1B in investment, which gets him into the top quintile of World Stock funds by assets. But he didn't seem to draw money from his old charges at Mutual Series (MDISX - $26B, MQIFX - $6B).
Where I think Gross does have an advantage is curiously where most commentators criticize him - management experience. When these other fund managers left, they had to form whole new organizations - using skills that for them were untested. Gross, though he's joining an existing family (Janus), is being given his own playpen to build. So he still needs to apply organization building skills. That's something he has experience doing - having built PIMCO.
I keep writing because I think there are a lot of different facets here, and everyone (including myself) is going to pick and choose. Raw numbers (outflows, inflows, performance) alone won't tell the story. Anecdotes won't either. We need to keep everything in mind when guessing what will transpire, or analyze what did happen six months down the road.
Comments
It will also be interesting to see what new funds open up at Janus.
Gross' star value could pull money into all of Janus' bond funds even if he has nothing to do with them, so you still might see that boost in inflows.
(My error in mentioning this fund/share class in an earlier post I made to this thread; I was following up on another post that described this fund as a load fund.)
Edit Definitely not having a good day. My error, again. Thanks to JohnChisum for pointing out that Janus quickly changed the name of the fund. So it seems Gross steamrolled Smith. Here's the SEC filing, dated today, short and sweet (fund name changed, Gross in as manage, Smith and Watters out):
http://www.sec.gov/Archives/edgar/data/277751/000095012314009838/d31178e497.htm
Some confusion over at Denver?
When you follow the link to the fund, you see at the top a parenthetical remark that the name change is not effective until Oct 6th. The actual, legal, current name of the fund (no Global) only appears way down on the page. The links to the documentation don't include the prospectus update that I linked to above. All of this says that this is a rush job. (Just as M* rushed in removing its "Gold" rating from the PTTRX summary page, but left it on other pages for the fund, e.g. Filings.)
Gross is featured prominently at the head of the page, and it is only when you scroll down that you see the current managers.
The SEC investigation is still a cloud on the horizon though. That cannot be discounted.
Janus should change that photo of Gross to a better one. He looks too sly in the one they have up at present.
http://blogs.barrons.com/focusonfunds/2014/09/26/seabreeze-buy-oaktree-on-grosss-departure/?mod=BOLBlog
"Instead, Kass says he is buying into Oaktree stock, on the basis of their 22% ownership stake in DoubleLine Capital—which was also in talks with Gross, Jeff Gundlach confirmed this morning. “At $50/share, Oaktree’s stock is well off their early 2014 high of over $62 and, arguably possesses the best management team in the industry,” Kass says."
Gross does have an outstanding 10 year and longer record, which various reports have pointed out. Whatever the management complaints have been, he did build a solid company, and I expect the PIMCO funds to perform reasonably well going forward as a result.
Grundlach did way better than TGLMX when he first left TCW, though over the past three years he has not done quite as well. In other words, TCW has held its own. But TCW had to buy MetWest to get that performance - too many people left TCW. I'm not expecting PIMCO people to leave and follow Gross.
Another analog, ironically enough, is Tom Marsico. Janus did just fine without him for about three years, at least until the .com bubble burst. So I suppose it's hard to tell how much credit to attribute to the organization, and how much to the manager.
I've focused on Gross' five year performance for a few reasons - it shows that his performance (to the extent that the PIMCO funds reflect his management) is variable and subject to long spells of mediocrity.
More important is that Gross has been promoting the New Normal (and now the New Neutral) for approximately five years (since May 2009). In other words, Gross has been saying that "this time is different". He's not done well throughout his self-declared new period, even though he's done well for many years before.
Either he's right, and we should be judging him based on how he handles this new investing environment, or he's wrong, which does not bode well for someone who invests on macro trends.
While he has been in the business for four decades, he didn't start managing retail funds (actually institution class funds) until 1987, well past the era of rising rates. So for him (and for nearly all managers) this time is different. I haven't been able to find any data on his involvement with separate accounts prior to that.
The more I think about his star value to Janus, the more I wonder about that as well. He's leaving a fund where people have been selling off for 16 straight months. I suppose that means that 3/4 of the money was still betting on him, or it could simply be sticky money that will stay with PIMCO because of inertia. And the $70B or so that flowed out is not likely to jump in with him at Janus.
Janus gets tons of free PR. Beyond that, I'm not sure what value they're getting in the long term.
If they want to have a retail share class and an institutional share class, that's more than enough.
In some corporate circles they would tell you that you have to be a team player. Never mind that knife sticking out of your back. I've been there.
I wish him well whatever happens or wherever he goes. Earlier in their haste to announce the arrival of the bond King, Mr. Smith's photo was replaced with one of Bill Gross. Haste or an ominous sign? Since then his photo has returned.
This may also depend if Bill is planning on bringing over some friends from elsewhere too.
This is what happens when you have fund families that try to sell funds through all channels - traditional (load-based) advisors, wrap accounts, direct retail, supermarket, retirement plan, and institutional. Three families come to mind - Janus, PIMCO, and American Century. I'm sure there are others.
Anyway, though Janus uses a couple of unconventional letters for some of their share classes, the classes you listed follow these basic channels:
traditional load - A, C (front load, level load)
D - direct retail sale (no 12b-1 fee, but 0.12% admin fee, for bookkeeping)
I - institutional (no admin/12b-1 fees)
N - retirement (no admin/12b-1 fees)
T - supermarket (0.25% admin fee)
S - wrap accounts (0.25% admin fee, plus 0.25% 12b-1 fee)
Some more common designations are Inv(estor) for directly sold noload shares, Adv(isor) for wrap or supermarket shares.
Many families use R to denote retirement class shares (or just use I shares w/o creating a different share class).
Usually, fund families use the same share class for more than one channel, which is why you don't often see as many as seven (or eight, with B shares) different classes.
(I'm not going into families that charge different fees depending on how big the account is - notably American Funds; but also Vanguard with Investor/Admiral, Institutional/Institutional Plus, Signal, ETF. These are just a couple of the more obvious families.)
For all this confusion, one nice thing about Janus is that if you're buying on your own, you only have to worry about T class (unless you're one of the grandfathered investors buying directly from Janus, in which case you just look at D shares). You don't have to think about multiple share classes.
09-26-14 Announcement from Janus CEO Richard Weil
Bill will help us build out a new Global Macro Fixed Income business and he will be named the Portfolio Manager of the recently launched Janus Global Unconstrained Bond Fund
Fund Page (D Class): Janus Global Unconstrained Bond
With a current E.R. of 96 bps and 08-31-14 net assets of $12.9 Million.
Holdings and Details
Footnote:
Effective October 6, 2014, the Fund's name changes from Janus Unconstrained Bond Fund to Janus Global Unconstrained Bond Fund with the transition of the Fund to William Gross
Over long term through Spring anyway.
1) Bill Gross will be managing a very small amount at first which will give him a lot of flexibility to take advantage of smaller inefficiencies in the fixed income markets. Jeff Gundlach has pointed this out.
2) There will almost certainly be significant inflows for quite some time. If Gross buys into some less liquid areas of the bond market the new money can cause "self propelled" performance as Gross continues bidding up prices of existing positions.
Gibson Smith is also a good manager and has done a good job with JANFX ($7 Billion in assets). He already has a lot on his plate. If Janus gets inflows across the board in fixed income, he will be very busy. JUCDX was a very small part of his responsibilities at Janus.
Perkins, Gibson and now hopefully Gross are needed to lend some credibility to Janus. For their own sake, I hope they know WTF they are doing.
Such overstatement; Pinto.
http://dealbreaker.com/2014/09/we-almost-had-a-universe-in-which-bill-gross-uttered-the-words-yes-mr-gundlach-anything-else-mr-gundlach-monday-friday/
Gibson has been an excellent manager at Janus. I stopped waiting for a turnaround at Janus Overseas.
BONG HiTS 4 BILL GROSS! (excerpts from 2007 Pimco Insight publication):
calculatedriskblog.com/2007/06/bong-hits-4-bill-gross.html
Would that be the 30% give or take that left Pimco Total Return ($292B to $221B in the 16 months ending 8/31) because Gross was managing it, or the 30% that may leave because he will no longer be managing it?
As the article points out, people look not only at the name but at the performance. When Gundlach left TCW, he was at the top of his game; Gross has been at best mediocre for several years. So what I expect to see in columns is evidence of confirmation bias - each writer will read into the numbers whatever he or she wants. It won't be easy to sort out the root causes of money movement, and the financial "reporters" won't even be trying.
My own personal bias is that I believe good performance (to the extent it is based on skill) is due to a combination of skills of the whole team - analysts as well as the fund manager(s). They serve different roles all of which are needed. Gundlach took a good chunk of his team with him (or so I understand). I don't expect Gross to have as much success with that.
I look at Mutual Series - many people expected it to fall apart after it was acquired by Franklin and Michael Price gradually faded away then left. But the funds performed quite admirably, especially in the first several years after the Price era. The organization seemed to hold together.
And speaking of Mutual Series, how did another wonderkind fare - David Winters? He was supposed to do great things and draw all sorts of money. His fund has subpar performance. He has drawn over $1B in investment, which gets him into the top quintile of World Stock funds by assets. But he didn't seem to draw money from his old charges at Mutual Series (MDISX - $26B, MQIFX - $6B).
Where I think Gross does have an advantage is curiously where most commentators criticize him - management experience. When these other fund managers left, they had to form whole new organizations - using skills that for them were untested. Gross, though he's joining an existing family (Janus), is being given his own playpen to build. So he still needs to apply organization building skills. That's something he has experience doing - having built PIMCO.
I keep writing because I think there are a lot of different facets here, and everyone (including myself) is going to pick and choose. Raw numbers (outflows, inflows, performance) alone won't tell the story. Anecdotes won't either. We need to keep everything in mind when guessing what will transpire, or analyze what did happen six months down the road.