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Bond giant Bill Gross to retire from fund management

Superstar fixed income investor Bill Gross is to retire after a career spanning more than 40 years

Bond giant Bill Gross to retire from fund management

Superstar fixed income investor Bill Gross is to retire after a career spanning more than 40 years, during much of which he was arguably the world’s most influential fund manager.      

One of the co-founders of Pimco, he was instrumental in building the Californian firm into a £1.3 trillion fixed income giant since its launch in 1971.

His later years were marked by controversy, however, with an acrimonious exit from the business in 2014 overshadowed by legal proceedings and a bitter falling out with his former colleagues.

Gross said: ‘I’ve had a wonderful ride for over 40 years in my career - trying at all times to put client interests first while inventing and reinventing active bond management along the way,

‘So many friends and associates at my two firms to thank – nothing is possible without a team working together with a common interest.’

Gross, 74, said he planned to spend more time on his charitable foundation and managing his own fortune.

Since exiting Pimco, Gross had run the Janus Henderson Global Unconstrained Bond fund, which he seeded with $700 million of his own cash.

His performance on the fund never matched that of his strongest earlier periods, however, with the mandate returning 1.8% over three years versus a 3.9% index return.

That was echoed by his ability to raise funds from investors, with the $950 million within the Janus strategy a distant shadow of the $300 billion he ran at Pimco.  

In a statement, Janus Henderson chief executive Dick Weil said: ‘Bill is one of the greatest investors of all time and it has been my honour to work alongside him. I want to personally thank him for his contributions to the firm.’

Speaking last summer, he admitted that Gross had been ‘wrong, and wrong badly’ on some of his recent asset allocation calls. ‘He's accountable and we're accountable for that,’ he added in an interview with CNBC. ‘Nobody is less happy about [Gross'] investment performance than he is.’

He will be remembered for some record-breaking earlier consecutive rolling periods of consistent outperformance, however, in addition to an outsized personality and a flamboyant turn of phrase

A successful gambler before he became an investor, Gross was happy to play to an audience at the peak of his fame, allowing himself to be profiled in a cowboy hat and dark glasses.

Speaking to the Guardian in 2010, when he was one of the most public faces of the bond vigilantes warning about western debt levels, he credited much of his success to studying psychology as an undergraduate at Duke University, rather than the more traditional routes into finance of economics, engineering or pure mathematics.    

'It gave me a window of interest into "animal spirits",' he said. 'I am not a quant, I don't have a 150 IQ, so you behave according to where you are, and I tried to put an amount of suspicion in the modelling of anything. The model could get broken by animal behaviour.'

Gross had departed Pimco amid widespread reports of a rift with his right-hand man at the firm, Mohamed El-Erian. Gross departed for Janus nine months after El-Erian became the chief economic adviser at Allianz, Pimco’s corporate parent.

In 2015, Gross sued Pimco for $200 million over an alleged breach of contract, bad faith and constructive termination after his ouster from the firm, claiming that managing directors at the company had conspired to push him out and deprive him of a $250 million bonus.

CITYWIRE VIEW

Head of investment research Frank Talbot

The past few years have not been easy for Gross and he has never been able to regain the magic that he had until his later years at Pimco.

Despite his well-documented struggles at Janus Henderson he was the poster boy of the bond bull market and was astonishingly consistent over his first 27 years in US Medium Term Debt, outperforming in all but one three-year periods, marginally missing out in his first period from June 1987 to June 1990.

In addition, he is one of only 17 managers we have tracked to outperform the market in each of their first 10 years as fund manager, achieved in US short-term debt.

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