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Bill Gross’ performance is ‘disappointing,’ Janus CEO says

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Legendary bond manager Bill Gross’ performance has been “disappointing,” and will take time for him to recover from losses and outflows, according to Janus Henderson Group CEO Dick Weil.

“I think the sort of underperformance we’re seeing is challenging and disappointing to him more than any of us,” Weil said. “It’ll take some time to dig his way out.”

Gross’ Janus Henderson Global Unconstrained Bond Fund (JUCIX) ended July at $1.25 billion, down almost $1 billion from its peak in February. Gross’ fund has lost about 7% this year. Weil hired the legendary bond manager in 2014 from Pimco, where they worked together before Weil became CEO of Janus Capital in 2010.

Weil said he still has faith in Gross as a money manager.

“Passive has clearly won the marketing battle to a great extent,” said Janus CEO Dick Weil.

“In time, he’ll come back around,” Weil said. “Bill’s a terrific investor and a terrific strong player.”

Weil, 55, was named on July 31 as sole CEO of the London-based firm that manages $370 billion, after the board chose him over Andrew Formica, his co-CEO since the May 2017 merger of Janus Capital and Henderson Group. Janus shares fell 8% after the announcement, the most since the two firms joined.

“The good news is it happened a little faster than expected,” Weil said of the selection of a single CEO.

The company’s stock has dropped 24% this year through Wednesday, compared with a decline of 7% for S&P’s index of 18 asset managers and custody banks.

The biggest losers so far? High yield bond and large value products.
August 1

Janus Henderson investors pulled a net $5.4 billion this year through June 30, raising questions about the rationale for the merger, which aimed to open new selling opportunities in Europe for Denver-based Janus and in North America for London-based Henderson.

Weil said his firm and other active managers face an uphill struggle to compete with lower-fee passive money managers.

“Passive has clearly won the marketing battle to a great extent,” Weil said. “We have to fight back a little bit more effectively. I think people have a sort of unrealistic expectation of active and passive and over time we need to do a better job of educating them that we have a really good chance of outperforming passive net of fees.”

Bloomberg News