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Former ‘bond king’ Bill Gross struggles to attract investors at Janus Henderson

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Bill Gross has struggled to attract new investors since he dramatically quit Pimco for Janus, with the man once known as “the bond king” managing less than 1 per cent of the assets he ran in 2014.

Mr Gross walked out of Pimco at a time of disappointing performance and rumours of infighting at the Californian company. His move to the smaller rival sent Janus’s share price soaring by more than 40 per cent.

But three and a half years after joining, Mr Gross’s flagship fund at Janus Henderson — the newly merged group — has just $2.2bn in assets in a blow to the company’s plans for growth. Mr Gross once oversaw close to $300bn in the Pimco total return fund, formerly the world’s largest bond fund.

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Randy Waesche, president and chief executive of Resource Management, a financial advice group, said Janus Henderson would be “absolutely” disappointed that Mr Gross had failed to draw new investors.

“He was a darling of Wall Street. They were expecting enormous flights of capital to Janus,” he said.

According to figures from Morningstar, the data provider, Mr Gross’s global unconstrained bond fund at Janus Henderson attracted $400m net last year, with outflows in the final month of the year. The fund’s assets have languished at about the $2bn mark for several years.

Janus Henderson, which was formed last year by the merger of US-based Janus and Australian-British asset manager Henderson, declined to comment.

Last year, analysts at Credit Suisse suggested Mr Gross’s fund could benefit from sales opportunities in Europe on the back of the merger of the two fund houses.

Several investment advisers said, however, that they were reluctant to invest with Mr Gross over concerns he had lost his magic touch. The investor developed a stellar reputation over several decades, overseeing strong performance at Pimco, which he co-founded in 1971.

His recent performance has been disappointing. His flagship fund at Janus Henderson returned just 1.94 per cent annualised over three years, while it has lost money this year. Mr Gross personally invested $700m in the fund when he started running it.

Mr Waesche said Mr Gross had a strong investment record but had previously benefited from factors including falling interest rates and his partnership with Mohamed El-Erian, chief executive and co-chief investment officer of Pimco until 2014.

“He needed three things — El-Erian, the environment of declining interest rates and the use of derivatives and leverage [for performance]. They were all there in his heyday but are largely not available now,” he said.

“Since he joined Janus, interest rates have been flat or started to trend upwards and the strategy he used to generate those impressive returns isn’t available to him.”

George Soros, the investor, one of his earliest backers, pulled $500m from Mr Gross’s fund in 2015 as losses began to mount.

Harris Nydick, founding partner at CFS Investment Advisory Services, a retirement adviser, said many clients had “made a lot of money with Bill Gross” over Mr Nydick’s 34-year career.

He added that Mr Gross’s behaviour in the lead-up, during and immediately after his departure from Pimco was “eye-opening and startling”, forcing investors to ask whether there was a better person to run their money, who did not come with such large “external downside risk”.

“For such an ego-driven fight to spill out of the executive suite and on to the intersection of Main and Wall Streets, there must have been a lot of fire where we could only see the smoke,” he said.

“It appears as though he continues to be distracted — just by different things.”

Mr Gross made headlines recently due to the sale of his stamp collection and comments that were deemed sexist.

He was also in the news after he sued Pimco for wrongful dismissal. He settled the case last year.

Ashis Dash, associate director of fixed income strategies for manager research at Morningstar, dismissed suggestions that Mr Gross had struggled to attract money at Janus Henderson.

“The strategy is over $2bn, which isn’t particularly small,” he said, adding that it was among the largest 20 funds out of the more than 100 in its category.

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‘Risk of civil unrest’ around election

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Facebook CEO Mark Zuckerberg on Thursday said the company has been taking steps to address the increased risk of potential civil unrest associated with the Nov. 3 U.S. presidential election.

“I’m worried that with our nation so divided and election results potentially taking days or weeks to be finalized, there is a risk of civil unrest across the country,” Zuckerberg said on a call discussing Facebook’s third-quarter earnings. “Given this, companies like ours need to go well beyond what we’ve done before.”

Zuckerberg noted steps that Facebook has taken in response to this increased risk. This includes helping users register to vote, providing users with accurate information about the election, banning new political ads one week prior to the election, blocking ads that try to delegitimize the election results and banning problematic content, such as groups focused on the QAnon conspiracy theory and Holocaust denialism.

“This is not a shift in our underlying philosophy or strong support of free expression,” Zuckerberg said. “Instead it is a reflection of the increased risk of violence and unrest.”

Facebook is not alone in these concerns. Walmart on Thursday also removed guns and ammunition from sales floors in stores where those items had been displayed because of isolated incidents of “civil unrest” in some areas around the U.S.

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Dow futures fall more than 300 points as Apple and Amazon shares decline after earnings

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U.S. stock futures fell in early morning trading Friday after some of the technology heavyweights came under pressure following their quarterly reports.

Futures on the Dow Jones Industrial Average dropped 355 points. S&P 500 futures and Nasdaq-100 also traded in negative territory.

Shares of Apple fell more than 4% in extended trading after the tech giant reported a 16% decline in iPhone sales and failed to offer investors any guidance for the quarter ahead. Amazon dipped 1.87% even after the e-commerce giant reported blowout third-quarter results with a big beat on the top line.

Wall Street staged a modest rebound on Thursday on the back of better-than-expected U.S. gross domestic product and jobless claim data. The 30-stock Dow gained more than 100 points for its first positive day in five, while the S&P 500 rose 1.2% to snap a three-day losing streak. The tech-heavy Nasdaq Composite climbed 1.6%.

Still, major averages are on pace to post their worst weekly performance in months. The Dow is down 5.9% week to date, on pace for its worst week since March 20. The S&P 500 has fallen 4.5% this week, headed for its worst week since June 12.

Volatility remained elevated as investors grappled with rising new cases of the coronavirus in the U.S. and abroad. The Cboe Volatility Index (VIX), also known as Wall Street’s “fear gauge,” touched a high of 41.2 Thursday, its highest level since June 15.

“Pre-election market volatility is not unusual and has arisen around swirling questions about elections, COVID-19, and economic and earnings growth,” Paul Christopher, Wells Fargo’s head of global market strategy, said in a note Thursday. “This indigestion triggered declines in the S&P 500 Index.”

The Dow and the S&P 500 are also set to post their second straight month of losses as Wall Street wraps up a turbulent October. The 30-stock average is down 4% this month, and the S&P 500 has lost 1.5%. The Nasdaq outperformed, rising just 0.2% in the same period.

Shares of Alphabet soared more than 7% in extended trading after the Google parent company posted quarterly results that topped Wall Street expectations. Meanwhile, Twitter dropped more than 14% after the social media company reported user growth that fell short of expectations.

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Amazon (AMZN) earnings Q3 2020

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