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.
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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