Did Bill Gross Provide Most Of The Cash For His New Janus Bond Fund?

According to a January 7th article in the Wall Street Journal by Kirsten Grind and Gregory Zuckerman, former PIMCO bond fund manager Bill Gross may have invested as much as $700 million of his own money into his new Janus Global Unconstrained Bond fund.

After a long-simmering dispute with other management burst into the public, Gross left Pacific Investment Management Co., the bond-fund giant he co-founded, in September of last year to join the much smaller Janus Capital Group Inc.

His new firm disclosed a couple of months later that investors has already invested nearly $1.1 billion into Gross’s new bond fund in October and November.

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$1 billion fund size minimum for institutional investors

Receiving enough money from investors for the Janus Global Unconstrained Bond fund to move past $1 billion in assets under management was critical for the new fund, as one billion dollars is a critical threshold for large investors. Industry analysts say even with Bill Gross’s reputation as a star fund manager, many large pension funds wouldn’t consider a fund with under $1 billion in assets.

Over $700 million for new Bill Gross fund came from single brokerage

However, according to the WSJ, the large majority of the money invested in the new fund came from a single Southern California brokerage office. Of note, this is the same office where one of Bill Gross’s personal financial advisers works, according to industry execs who have seen confidential brokerage data.

The Morgan Stanley wealth-management office in La Jolla, California sent over $700 million to Gross’s Janus fund in October and November, according to sources who saw brokerage-firm fund-asset data from financial data provider Albridge. The funds sent from this office represented well over 60% of the money Gross raised in the first quarter after he left Pimco.

Although it is not known if the money originated from one or more than one investor or financial adviser, although Bill Gross has admitted at least some of the capital for the new fund comes from him. Analysts and industry experts note it isn’t unusual for a manager to invest in his own fund, but it very uncommon for a single firm to account for over half of a new fund’s capital.

When asked for a comment on the matter, Janus replied it doesn’t comment on specific fund shareholders or their investments “as a matter of policy and out of respect for the privacy of the firms we serve and their mutual fund investors.”