Bill Gross's Bond Fund Dips Under $1 Billion After Redemptions

(Bloomberg) -- Investors keep pulling money from Bill Gross's bond fund.

The Janus Henderson Global Unconstrained Bond Fund suffered about $60 million of redemptions in December, according to Bloomberg estimates. The outflows lowered the fund's assets to $950.4 million from February's all-time high of $2.24 billion.

Investors have pulled money for 10 consecutive months since the February peak, in part amid misplaced bets by the fund that rates on U.S. Treasuries and German bunds would converge, a position it later scaled back. Gross piled up a loss of about 4 percent last year, underperforming more than 80 percent of peers, according to data compiled by Bloomberg.

A spokesperson for Janus Henderson Group Plc could not immediately be reached for comment via email outside of office hours. The decline in the fund's overall assets was first reported by The Financial Times.

Gross, 74, took over the unconstrained fund in October 2014 after being ousted from Pacific Investment Management Co., where he managed the world's onetime largest mutual fund, Pimco Total Return. Last year's slump was one of the toughest in his storied career that dates to 1971.

Gross leveraged up his bond fund through the use of futures during the first half of 2018, only to suffer big losses on those tied to interest rates. He had almost $153 million of losses on interest-rate futures in the first half.

Unconstrained bond funds, which represent a niche within the fixed-income world, free managers like Gross to hold various types of assets, ranging from cash to banks loans and derivatives.

Bets that U.S. 10-year bond yields would narrow their spread over those of similar German debt were mostly losers in 2018. The gap closed at about 2.46 percentage points on Friday.

Estimates for the Janus fund flows are based on the change in assets over the month that isn't accounted for by performance, fees or reinvested dividends. The numbers may vary from actual figures and from estimates compiled by other data providers.

The U.S. share price of dual-listed Janus Henderson Group Plc fell 46 percent in the past year to $21.37.

--With assistance from Todd White and Ruth Carson.

To contact the reporter on this story: Matthew Burgess in Sydney at mburgess46@bloomberg.net

To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Jake Lloyd-Smith

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