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Bill Gross’ Oil Exposure Mars his Rookie Quarter at Janus

Bill Gross’ Unconstrained Bond Fund returned just 0.56% in the recent quarter, compared to more than double that amount at PIMCO’s Total Return Fund

Bill Gross

After Bill Gross’ well-publicized exodus from Pimco, he has seen losses at Janus with his Unconstrained Bond Fund, due mainly to the fall in fuel prices and weakness in Russia and Brazil, according to Marketwatch.

The loss is particularly wounding for Gross, since his move to Janus, to avoid being sacked at Pimco, should have been redemptive (but without massive redemptions of investors). Instead, the Unconstrained Bond Fund, of which Gross and his family owns 51%, returned 0.56% while Pimco Total Return Fund, which Gross once managed, rose 1.32%

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The main cause of the shortfall was the unexpected 42% drop in oil prices. Gross wasn’t the only one who made a losing bet on oil; hedge fund manager John Paulson also lost a significant amount on trying to catch a bottom in fossil fuels. Gross’ fund had 5% invested in Brazilian and Russian Energy funds. Janus said, according to ibitimes, “The energy sector exposure detracted the most from the fund’s performance. Its exposure to U.S. dollar denominated Russian and Brazilian corporate bonds also detracted.” Janus added that the long-term outlook for equities was 4% to 5% for equities and 2% to 3% for bonds.

The fund was also hurt by credit default swaps with exposure to sovereign debt in Mexico, China, Russia and Brazil.



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