Posted on 09/26/2014 6:13:02 AM PDT by SeekAndFind
Bill Gross, who co-founded Pacific Investment Management, or Pimco, in 1971, will leave his own firm to join competitor Janus Capital.
Gross served as the firm’s chief investment officer and managed the Pimco Total Return fund — one of the world’s largest bond funds with more than $1.9 trillion in securities, according to the company’s website. The fund has not done well for years, though, and has been plagued by huge outflows.
“I look forward to returning my full focus to the fixed income markets and investing, giving up many of the complexities that go with managing a large, complicated organization,” Gross said in a statement.
(Excerpt) Read more at time.com ...
First, the well known Harvard University Endowment fund manager Muhammad El Erian, now Bill Gross himself.
How will this affect the TOTAL RETURN FUND?
I expect mass withdrawals during the next few days and weeks.
Whichever managers remain at PIMCO have a huge fire to fight with large accounts to explain what is going on and convince them not to withdraw funds. Could be quite a shock to the bond market.
On sqawk talk today they mentioned something about some investigation but who knows if that had anything to do with it. My guess is he is rich enough that he no longer wants. The pains of being CEOS and happy to go back to his roots
From what I’ve heard, others want Bill removed because of poor performance, but Bill wanted low yield, safe assets, while others want high reward, risky assets
I don’t know, i personally “lost” roughly ~500k with Janus fund.
I wouldn’t go anywhere near Janus...
I would look at this way....they wanted a fund vehicle for safe returns. Safe returns twenty-five years ago meant seven-percent a year on average. Safe returns today mean three-percent a year on average. Folks just don’t grasp that when the fed rate went to almost zero...we really screwed up our traditional safe return market. Bill did his job...but it’s in an environment where people just won’t accept low and safe returns anymore.
My dad would refer to this period in the late 1960s to late 1970s...where a bank CD could get as high as twelve-percent on some rare occasions, and would routinely hit seven percent. Old guys liked that type of risk market and decent return.
Back in 1980, our four year old son earned 20 percent interest on a $100 CD from a savings and loan. Our bank wouldn’t offer a CD for anything less than $500.
I’ll bring up this story.
Years in my community (rural Bama), we had a guy who was a carpenter for the county school system. He’d married some gal in 1948, and he built his own house around the 1950-52 era. Never borrowed money, just cashed his paycheck, bought the materials, and kept building a simple two-bedroom place (later bricking it in the mid-60s.
He bought a truck in 1948....kept it til the early 1960s, then buying a second truck. Swapped it in early 1980s, and buy his fourth and last truck around 1999. All paid in cash.
His wife grew just about everything required in life on the farm, and he had around a dozen livestock. His one trip a month to the grocery was mostly for sugar, flour or coffee. No kids. The wife did a lot of canning. Neither the wife or him ever drank Coke or sodas....preferring tea or spring water from the well.
No TV in the house for that entire period, just an old 1940s radio.
In the late 1990s, he retired. His wife ended up with dementia and he tended to her. They passed away within a year or so of each other. The family knew of his passion for never spending much.
The thing is...he put his money in the 1960s, 1970s, 1980s...into CD’s. There were years when it paid fifteen percent. There were lesser years when he made six or seven percent. I admit the late 90s came with marginal rates of three percent.
All of this led the family to meet up at the lawyer’s office after his passing and then progress to the bank...finding out that he had well over a million bucks (I think it was near $1.3 million). I think people were a bit amazed at how much he had....but then you start thinking about his lifestyle, his belief in CDs, and how the CD market worked for guys like him. After retirement, he lived off his meager county school pension check and social security with no issue.
btw, I think interest rates ballooned in the early 80s courtesy Jimmah Cahtah’s economics (or lack of same.) In 1981, the family owned coal mine I worked for financed a new Manitowoc 4600 dragline for $1.2 million. We paid 21 1/2 percent interest for the first year of the note.
CD’s don’t pay enough right now to keep up with inflation. The FED has hurt people that just want to save with QE and low interest rates.
Yep. Save the banks, screw the people. Too pig to flail.
Probably time to sell our BOND etfs.
Thanks to Bill for a good ride, good dividends and an increase in our purchase prices.
I just sold our Bond ETF’s at market price, a fairly large holding for me and a larger one for my wife. We made about 8% in a couple of years plus the nice dividends.
Thanks for posting this.
This is why I just sold our BOND etf’s : “From what I’ve heard, others want Bill removed because of poor performance, but Bill wanted low yield, safe assets, while others want high reward, risky assets.”
Whenever, Bill left a fund management position. We sold what he had managed and never looked back.
RE: From what I’ve heard, others want Bill removed because of poor performance, but Bill wanted low yield, safe assets, while others want high reward, risky assets
This news seems to have confirmed what you heard...
Bill Gross was showing “increasingly erratic behavior” and was about to be fired from Pimco, according to both The Wall Street Journal and CNBC. Janus Capital Group Inc. JNS, on Friday said Gross would join its firm, effective Monday, and manage the Janus Global Unconstrained Bond Fund JUCAX.
Pimco didn’t immediately respond to a request for comment on the reports but said in an earlier statement that “over the course of this year it became increasingly clear that the firm’s leadership and Bill have fundamental differences about how to take PIMCO forward.”
http://finance.yahoo.com/news/pimco-mutual-funds-plunge-following-161002028.html
Another reason to avoid mutual funds. Pimco Mutual fund owners had to wait until their prices went down to sell at the end of the day.
As Bond ETF owners, we bailed quickly and suffered minor losses.
Pimco Mutual Funds Plunge as Gross Goes
In the stock market, investors didn’t wait around to assess the implications of Bill Gross’s departure from Pacific Investment Management Co. — they sold.
Pimco’s Global Stocks Plus & Income Fund slipped 5.7 percent to $23.67 at the close in New York, while the firm’s High Income Fund decreased 6.1 percent to $11.69, the biggest drop in 16 months. The Pimco Corporate & Income Opportunity Fund slid 6.6 percent to $17.18, and the Pimco Total Return ETF declined 0.3 percent to $108.57.
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