Bill Gross’ Janus Global Unconstrained Bond Fund Reverses Withdrawals

Janus Global Unconstrained Bond Fund, a mutual fund managed by Bill Gross reversed withdrawals after receiving $10.2 million inflows in March, according to data from Morningstar.

In February, investors withdrew $18.5 million from Janus Global Unconstrained Bond Fund, which were the first monthly withdrawals recorded since Gross started managing the Fund on October 6, 2014.

The Class T Shares of Janus Global Unconstrained Bond delivered 0.87% returns since Gross started managing it and 2.05% year-to-date. Its net asset value (NAV) is $9.96 as of April 9. The Fund has $1.45 billion in total assets as of February 28.

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Gross left Pacific Investment Management Company (PIMCO) on September 26 last year to join Janus Capital Management. At PIMCO, he managed the firm’s flagship Total Return Fund. He built PIMCO as one of the largest investment firms worldwide.

Gross commentary on Janus Global Unconstrained Bond Fund’s 4Q portfolio

During the fourth quarter, Gross commented that the investment environment was challenging for Janus Global Unconstrained Bond Fund due to several factors such as the sharp decline in crude oil prices amid the crosscurrents of U.S. growth and the economic slowdown overseas.

Gross said the Fund underperformed its three-month LIBOR benchmark during the quarter. It seeks to achieve long-term positive returns without traditional benchmark constraints and regardless of market conditions.

Janus Global Unconstrained Bond Fund has broad investments across assets classes and global financial markets.  The Fund made its largest investment in corporate credit, both investment grade and high-yield. Its investments have shorter-date maturities of one to three years in general.

Structural Alpha strategy

Gross said, “The Fund’s energy-related corporate bonds detracted from performance while a “Structural Alpha” strategy related to volatility was a contributor.”

According to Gross, the Structural Alpha is intended to help Janus Global Unconstrained Bond Fund provide excess returns regardless of prevailing market conditions. The approach had three components including credit default swaps (CDS), volatility sales, and relative value trades during the quarter.

“The outlook for long-term market returns is lower than it has been historically, with the potential for increased volatility near term. This will inform the Fund’s positioning going forward,” said Gross.

Gross said his strategy in managing his portfolio was similar to Ray Dalio’s approach at Bridgewater Associates, one of the world’s largest hedge funds. Dalio is known for utilizing leverage to boost returns from his bond, equity and commodity investments.

In his recent Investment Outlook, Gross explained that” cheap leverage” helps generate alpha “as long as short rates stay low.”