Published On: Fri, Dec 26th, 2014

Ascension of Bond King Bill Gross Raises Hopes for Janus Turnaround

Bill Gross

When Bill Gross quit bond giant Pacific Investment Management Co. three months ago, almost as stunning as his departure was his choice of employer: Janus Capital Group, a struggling mutual fund company based in Denver specializing in stocks whose assets had shrunk by half from a peak 14 years earlier, Bloomberg said.

Two chief executive officers had tried and failed to turn Janus around. A third, Richard Weil, a former Pimco operating chief who’d worked with Gross, had made changes, yet investors were still pulling money out. When Gross asked to run a new bond fund for Janus, Weil saw the potential breakthrough he’d been looking for. “Bill Gross is our Peyton Manning, that game-changing level of talent for us, ” Weil says. “People are looking at us.”

Hiring Gross was the boldest step yet in Weil’s almost five-year effort to restore Janus’s reputation. Earlier this year, Weil hired Nobel laureate Myron Scholes as chief investment strategist, and he has worked to diversify the company’s offerings. About 80 percent of Janus’s assets are in actively managed stock funds, compared with 92 percent at the end of 2009, the report said.

Janus’s shares soared 43 percent on Sept. 26, their biggest one-day gain ever, after it announced that Gross was joining the firm. The stock has almost tripled in the past three years. “Since Dick’s arrival, he’s done a number of interesting things and they’re starting to take shape, ” said Macrae Sykes, an analyst at Gabelli, who recommends investors buy Janus shares. “You’re starting to see some nice fruit from his ascension, ” according to Bloomberg.

Janus has suffered redemptions for 21 straight quarters, and assets—$174 billion at the end of the third quarter—remain 48 percent below their peak in 2000. While clients are on track to add more money than they take out in the fourth quarter, Gross so far has attracted only a small fraction of the billions that clients pulled from Pimco after his departure. His Janus Global Unconstrained Bond Fund declined 0.5 percent since he took over on Oct. 6 through Dec. 19, beating 65 percent of similar funds. Gross declined to comment, the report said.

Gross is one of the few household names in the mutual fund business. His main fund for his former company, Pimco Total Return, gained an average of 6.8 percent for the past 15 years, beating 96 percent of similar funds, according to Morningstar. Pimco’s assets doubled, to $2 trillion, from 2010 to 2013.

Meanwhile, Business News Network said the longest commodity slump in at least a generation means that the U.S. is “dis-inflating, ” according to Gross, instead of the surge in consumer prices that gold buyers have been expecting for much of the past decade.

 

 

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