By Kirsten Grind
Janus Capital Group Inc. has rallied its sales force around Bill
Gross, helping to push the assets in his new mutual fund past the
$1 billion mark in November.
Mr. Gross's strong performance also contributed to the fund's
increased assets as bets on derivatives linked to China and Mexico
appear to have paid off, analysts say. The Janus Global
Unconstrained Bond fund returned 0.36% during the month, beating
out 82% of similar mutual funds, according to fund research firm
Morningstar Inc.
Investors poured $770 million into the fund during the month, on
top of $364 million in October. Mr. Gross took over the fund
following his Sept. 26 departure from Pacific Investment Management
Co., the money manager he co-founded.
Since Mr. Gross's arrival, Janus has launched a sweeping
marketing outreach to financial advisers through emails, phone
calls and in-person meetings, and pushed to get its funds listed on
big mutual fund platforms, according to financial advisers.
That effort helped persuade financial advisers like Ronald
Myers, who says he is moving some clients' money into Mr. Gross's
new fund.
"I think the fact that it's smaller and nimble really lends
itself to a new performance structure," says Mr. Myers, a partner
at Associated Investor Services, based in Fort Lauderdale, Fla.
The investor money is the latest shot of good news for Mr. Gross
after his messy breakup with Pimco. Executives at Pimco were
planning to fire Mr. Gross after months of rising tensions and
increasingly eccentric behavior, The Wall Street Journal has
reported. Mr. Gross's flagship Total Return Bond fund at Pimco had
posted lackluster returns and suffered through investor outflows
for more than a year. The Total Return fund had about $290 billion
of assets at its peak in May 2013, according to Morningstar.
Last month, George Soros gave Mr. Gross a boost when his Soros
Fund Management said it would invest $500 million in a separate
account that would follow the strategy of the Janus Global
Unconstrained Bond fund.
Sumit Desai, a fixed-income analyst at Morningstar, called the
rapid growth in Mr. Gross's new fund "very impressive." The fund,
launched in May, had about $12 million of assets under management
when Mr. Gross took over.
"Our story features Bill Gross and his Global Unconstrained Bond
fund, of course, but has been underway for some time and is much
deeper than Bill alone," a Janus spokesman said in a statement.
Janus said in its statement that inflows across all of its
mutual funds were net positive for the month, although it didn't
release specific figures. The influx of cash across the Janus funds
in October and November mark the first time the firm has seen two
consecutive months of inflows since the first quarter of 2010,
according to the firm.
Still, the amount of money flowing into Mr. Gross's new fund is
just a fraction of the amount leaving Pimco. The Newport Beach,
Calif.-based firm has seen about $60 billion in investor outflows
between September and November just in Mr. Gross's former flagship
fund, the Pimco Total Return fund.
In November, the Metropolitan West Total Return Bond fund saw $3
billion worth of inflows, the most of any taxable bond fund during
the month, while the Vanguard Total Bond Market Index fund saw $2.6
billion of inflows, the second highest, according to
Morningstar.
In a research note on Janus published last week following data
showing lower outflows at Pimco, Citigroup analyst William Katz
wrote that Janus's share of the outflows is "less than original
expectations," and that Janus "faces diminishing opportunity to
garner share."
Jerry Verseput, a wealth manager at Veripax Financial Management
in Folsom, Calif., says he has pulled client money from Pimco Total
Return, but doesn't plan to follow Mr. Gross to Janus. "He's not
the only good bond fund manager in the world," says Mr.
Verseput.
Some financial advisers say they have received voluminous
materials from Janus, including emails, brochures and invitations
to conference calls pitching Mr. Gross's new fund. Mr. Desai, who
says he spoke to Janus executives, says the firm also has spent a
lot of time making sure Mr. Gross's fund is listed at the large
brokers who sell mutual funds to investors.
Mr. Gross appears to have placed large bets globally in his fund
by taking long positions in certain countries. Janus says 6.9% of
assets in the fund are exposed to China through derivatives while
another 6.47% of assets are exposed to Mexico, also through
derivatives, his two largest holdings, according to the fund's
website.
"You're getting more yield in some of these markets as opposed
to more established European and U.S. markets," Mr. Desai says.
Mr. Gross's November performance is right in line with the Pimco
Unconstrained Bond fund, a $12.9 billion fund that Mr. Gross used
to manage. That fund also returned 0.36% in November, according to
Morningstar.
Janus' shares rose 12 cents, or 0.77%, to $15.63, on Monday.
Write to Kirsten Grind at kirsten.grind@wsj.com
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