Bill Gross's bond fund sees $580 million of outflows in first half

Withdrawals came as his fund posted the worst performance among its peers

Jul 10, 2018 @ 4:13 pm

By Bloomberg News

Investors pulled a total of about $580 million from Bill Gross's bond fund in the first half of this year, and he turned in the worst performance among his peers during the period.

June marked the fourth straight month of withdrawals for Mr. Gross's Janus Henderson Global Unconstrained Bond Fund. The outflows dragged assets down to $1.48 billion, according to Bloomberg estimates. The go-anywhere fund declined 6.3% this year through June.

Unconstrained mutual funds have met with mixed results in 2018 as rising interest rates hurt total returns. The funds have the latitude to stray from conventional benchmarks that usually provide moorings for fund weightings such as duration, credit quality or asset type. The Bloomberg Barclays U.S. Aggregate Index, a benchmark for many intermediate-term funds, declined 1.6% in the first six months.

(More: Bear market for bonds has arrived, Gross says)

In June, outflows from Janus Henderson Global Unconstrained were about $185 million, an improvement from roughly $300 million in May, which was a record for the fund. Assets as of the end of June were down from $1.69 billion a month earlier and a peak of $2.24 billion in February, Bloomberg's data show.

Mr. Gross's fund, which relies largely on derivatives and options-based strategies to generate returns, ranked last in first-half performance among 44 peers in its Bloomberg category.

Mr. Gross, who works out of Newport Beach, Calif., and London-based Janus Henderson Group didn't respond to calls and emails seeking comment.

Janus Henderson Global Unconstrained slid 3% on May 29, the largest one-day drop of the year among bond mutual funds with more than $1 billion. Mr. Gross, 74, blamed the setback on a bet that the gap between U.S. Treasury and German bond rates would narrow, which didn't happen.

"The strategy has been to be short the German bund and long U.S. Treasuries," he said June 1. "That was the basis for the bad day and the bad trade."

Mr. Gross joined Janus in 2014 after an acrimonious parting with Pacific Investment Management Co., the bond fund giant he co-founded in 1971. About $700 million in the unconstrained fund was his personal money as of June 2017, according to filings.

Estimates for the Janus fund's flows are based on the change in assets over the month that isn't accounted for by performance or reinvested dividends. The numbers may vary from actual figures and from estimates compiled by other data providers.

(More: Funds like Magellan need gamblers like Bill Gross)


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