Probably no mutual fund manager is as famous or as influential in the investor advisor industry as Bill Gross, now a five-time member of our IA 25 list.
Up until late September 2014, he ran the world’s largest bond fund, the PIMCO Total Return Fund, which he created in 1987 and grew to $270 billion in assets by 2012. (The Vanguard Total Bond Market Index fund took the world’s-largest title in May). The fund often outshined its competitors, earning Gross Morningstar’s Manager of the Decade award in 2010 for “investment calls and top-notch performance” that made investors $47 billion wealthier and Gross “one of the best investors of our era.” The Bond King ruled.
But in 2013 PIMCO Total Return posted its first loss in 14 years, underperforming the majority of its peers that year and the next, suffering almost 17 months of non-stop redemptions.In September 2014, Gross suddenly announced he was leaving the company he had co-founded more than 40 years before for a new job at Janus Capital Group. A few days before, it was reported that the SEC was investigating whether PIMCO had artificially boosted the returns of its Total Return ETF managed by Gross, according to “people familiar with the matter.”
Gross’s departure was especially surprising since he was by then the sole leader of PIMCO after his co-chief investment officer, Mohamed El-Erian, unexpectedly resigned months before following rumors and reports of growing tensions between the two men.
Gross, as usual, triumphed. Ten million dollars immediately followed him out the door to the new Janus Global Unconstrained Bond Fund that he started, and legendary billionaire investor George Soros invested $500 million in a separately managed Janus account managed by Gross.
By April 10, assets of the Unconstrained Bond Fund had had grown to $1.5 billion. The growth, however, wasn’t due to only performance and inflows. Gross himself had invested $700 million in the fund, Janus Chief Executive Dick Weil disclosed in January.
It was another surprising revelation about a money manager and financial executive who doesn’t cease to amaze, often but not always because of his market prowess.
In 1999, Gross warned in his monthly market letter that the dot-com bubble would soon burst, and it did the following year.
In Late March 2006, he wrote that the Fed would soon stop raising interest rates. After two more rate hikes, the Fed ceased its rate hikes, and a year later began a historic run of rate cuts until they finally fell to near zero.