Bill Gross the Next Chapter and Today’s Other Top Stories

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Bill Gross sits down behind his new desk at Janus this morning, Starbucks in one hand peanut butter sandwich in the other. It’s business as usual for the bond king. Except it’s not.

Two weeks ago Gross was managing $2 trillion in assets, but his new Janus Global Unconstrained Bond Fund has just $13 million, although that is expected to have swelled to around $100 million in the past week or so.

Despite his perceived fall from grace, Mr. Gross’ told InvestmentNews in one of his first interviews since leaving Pimco. That his competitive animus remains as strong as ever, if not stronger. Whether propelled by the desire to reclaim his legacy or blatant bloodlust for his former employer, the 70-year-old is intent on getting back to the top of his game. In fact, he refers to his desire to beat his rivals as a “constructive obsession.”

Gross was motivated to join Janus partly because of his relationship with Mr. Weil, a former lawyer who took over the firm in 2010 after holding senior roles at Pimco, and with Myron Scholes, a superstar academic and Nobel laureate who worked with Mr. Gross as a Pimco board member in the 1980s. Mr. Weil’s wife, Britney, was previously Mr. Gross’ executive assistant.

“I’m not going to be hiring; I’m not going to be firing,” Mr. Gross said. “That’s one of the things that I’m relieving myself of … so thank goodness that’s over. I’m going to have an investing thrust as opposed to an executive thrust.”

The idea of Bill Gross rolling up his sleeves and single-handedly managing money at a startup fund is an intriguing one, but the reality is that he has long relied on a talented team and vast pool of resources at Pimco that Janus can’t possibly match anytime soon.

Gross will also have broader responsibilities related to building out Janus’ fixed-income business, and there are questions about the strength of his commitment. Will he be here today and gone tomorrow. Investors considering switching to Janus should keep these issues in mind.

You can view the full interview with Gross here.


Todays Other Top Stories

Learn Bonds

Learn Bonds: – 3 High-risk, high-reward, high-yielding corporate bonds. – For some investors, cash is king. For others, income-producing assets are king. If you are a member of the latter group, you may be interested in the following three high-risk, high-reward, high-yielding corporate bonds.


Municipal Bonds

Bond Buyer: – Waiting Game: Retail buyers hoard cash for future rate increase. – Retail investors are keeping their powder dry, holding money out of the municipal market as they wait for the Federal Reserve Board to make good on its promise of higher interest rates, municipal managers said.

Stamford Advocate: – States must make full disclosure on bond offerings. – Most municipal-bond investors are individuals who tend to hold bonds until maturity. These “retail” investors hold more than 75 percent of the municipal-bond market either directly or through mutual funds. There are more than 1 million different municipal bonds outstanding.

Bloomberg: – Washington bonds beat market as Federal cuts defied. – Debt of the nation’s capital has returned 9.1 percent this year, beating 45 states and the 7.8 percent advance for the broader $3.7 trillion municipal market, according to Barclays Plc data. The city plans to sell $523 million of general-obligation bonds this week, its largest offering since last year’s federal spending reductions began exerting a drag on the local economy.


Bond Market

Market Watch: – Bond trading is about to get a whole lot harder. – A fall in the price of junk bonds, sparked by the perception that the risky debt was getting overvalued, was notable for one thing: traders weren’t complaining about an inability to locate buyers amid the recent selloff.

Fosters.com: – Bond investing still carries some risk. – Burned by the stock-market crash during the financial crisis, investors have poured a trillion dollars into bond funds in the past six years. They like the interest payments that bonds throw off, and that their prices barely move day to day.

Bloomberg: – Goldman says not so fast as BlackRock sees earlier Fed increase. – Goldman Sachs Group Inc. says investors shouldn’t rush to anticipate a rate increase from the Federal Reserve after jobs gains beat economist forecasts. BlackRock Inc. said it’ll happen sooner than expected.

Businessweek: – Sovereign bonds approach lowest level in 2014 on Fed outlook. – An index of sovereign bonds approached the lowest level this year after a bigger-than-expected U.S. employment gain boosted speculation that the Federal Reserve will raise interest rates in 2015.

Bloomberg: – Washington bonds beat market as Federal cuts defied. – Even a budget-cutting Congress isn’t hurting Washington’s standing on Wall Street.


Treasury Bonds

Bloomberg: – American banks pile up Treasuries as deposits surpass loans. – American banks are loading up on U.S. government debt, a sign they remain cautious on the economy even with the jobless rate at a six-year low and corporations at their healthiest in a generation.

CNBC: – Treasurys steady after Friday’s declines. – Treasury notes were flat to slightly higher on Monday, after Friday’s better-than-expected non-farm payrolls.


Investment Grade Bonds

FT: – Start getting ready for the corporate bond crash. – How close are we to a credit market crash? I would say that when prospective witnesses at the post-crash Congressional hearings begin circulating drafts of their testimony in advance . . . you should perhaps get ready.

Bloomberg: – Corporate bond sales fall to lowest level since August. – Corporate bond sales slumped to the lowest weekly level since August as Bill Gross’s departure from the bond firm he co-founded made investors wary of potential market disruptions and curbed issuance.


High Yield Bonds

CNBC: – Is it time to buy junk bonds? – Larry McDonald, senior director at Newedge USA, says that junk bonds have seen a correction over the last two weeks but if they get “a little cheaper it’s a buy.”

WSJ: – Wall Street declares all clear for junk bonds as yields entice. – Morgan Stanley and BlackRock Inc. say it’s time to buy junk bonds again after yields on high-yield, high-risk securities rose to the highest in a year on Sept. 29, resulting in losses not seen since the mid-2013, Federal Reserve-induced taper tantrum.


Catastrophe Bonds

Artemis: – ILS rates ‘plunge to new lows’, soft market prevails. – The pace of decline shown by insurance-linked securities and catastrophe bond premiums or rates has accelerated through the third-quarter of 2014, plunging to new lows, according to the latest analysis from ILS consultancy Lane Financial LLC.


Emerging Markets

What Investment: – The eight golden rules for emerging market investing. – Austin Forey, manager of the JP Morgan Emerging Markets investment trust, has outlined the eight golden rules he believes investors in emerging markets should follow.

FE Trustnet: – What the end of QE means for your emerging markets fund. – BlackRock’s Gerardo Rodriguez Regordosa reveals where the end of loose monetary policy could hit emerging and frontier markets hardest.


Investment Strategy

FT Adviser: – Role of fixed income in multi-asset. – When considering the role of fixed income in a diversified multi-asset, multi-sector portfolio, the primary focus is to provide a stable source of return while serving as a diversifier to the riskier equity allocation, which is likely to be the leading driver of total returns over the long term.

Income Investing: – BlackRock warns on short-dated bonds as rates set to rise. – After last year’s bond-market rout, a lot of investors’ response was to shorten the duration of their portfolios, jump into unconstrained bond funds, add bank loans and generally seek the shelter of short-dated bonds. But those short-dated bonds could be the last place you want to be these days, warn’s Jeffrey Rosenberg, BlackRock‘s chief fixed-income investment strategist.

Investors.com: – What should income investors do as higher rates loom? – The times are always changing in the market, which poses hazards for income investors. Income investors sometimes have a disposition of “Buy me something safe, so I can forget about it.” Yet the world of money doesn’t offer that as a choice.

Robert Kron: – Questioning your bonds? 3 questions to ask your advisor. – Uncertainty is in the air, particularly if you’re a fixed income investor. As BlackRock’s Chief Investment Strategist Russ Koesterich wrote earlier this week, bond investing is different today than it was in the past. And that may well mean that what you were doing in the past doesn’t work quite the same (or as well) as it used to.

MoneyBeat: – Equity investors miss the connection as bond buyers board flight to safety. Credit markets often cotton on to trouble ahead of equity markets. So stock investors might want to pay attention to the latest retail fund-flow data out of Europe. European high-yield bond fund flows turned negative for the year in the week to Oct. 1. That marked the fifth consecutive week of withdrawals, Bank of America Merrill Lynch points out.

WSJ: – How to buy bonds in a rising rate world. – (Subscription) Bond investors haven’t experienced a prolonged rise in U.S. interest rates in almost a decade. But this sunny climate seems about to get chillier, forcing bondholders to adjust their portfolios—and expectations.

Financial Advisor: – Here’s how to build a no drama, low-cost total return fund. – Investors were pulling out of Pimco’s popular Total Return bond fund in droves even before Bill Gross suddenly jumped ship on Sept. 26.


Bond Funds

FT: – Media is ‘making a meal’ of SEC’s investigation into Pimco ETF. – The probe by US regulators into Pimco’s management of its flagship exchange traded fund has again raised uncomfortable questions about the transparency of ETFs and whether investors are getting a fair deal.

WSJ: – An ETF giant stomps over to ‘active’ side. – (Subscription) Many investors are shunning actively managed mutual funds for low-cost exchange-traded funds. So why is BlackRock Inc., which owns the successful iShares ETF franchise, trying to build up its active-fund business?

WSJ: – Was Bill gross the last star manager? – (Subscription) Over the years, many mutual-fund companies have learned the hard way about basing their sales pitches on star managers. Inevitably their performance worsens, or they head for the exits. Investors, who often jump aboard after a manager’s best returns are history, are left to deal with the consequences. As a result many funds have been trying to put forward more co-managers and teams in place of star managers.

Zacks: – 5 top-rated diversified bond mutual funds to bet on. – We share with you 5 top rated diversified bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view the Zacks Rank and past performance of all real estate funds.


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