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UPDATE 1-Bill Gross gets co-manager on Janus Global Unconstrained Bond
July 1, 2015 / 3:33 PM / 2 years ago

UPDATE 1-Bill Gross gets co-manager on Janus Global Unconstrained Bond

(Adds outflow figure in Janus Global fund, quotes from director of ETF & Mutual Fund Research at S&P Capital IQ)

By Jennifer Ablan

NEW YORK, July 1 (Reuters) - Star bond fund manager Bill Gross will be getting help running his struggling Janus Capital Group Inc mutual fund from Kapstream Capital Pty Ltd’s Kumar Palghat, Janus said on Wednesday after acquiring a majority stake in Kapstream.

Gross, who began managing the Janus Global Unconstrained Bond Fund in October, will continue to be primary portfolio manager, Denver-based Janus said. Palghat will be co-portfolio manager.

The fund has underperformed 80 percent of its peer category so far this year and has had low cash inflows. In May, it posted net outflows of $11.7 million and had assets under management of $1.5 billion at the end of the month, according to Morningstar.

Kapstream is a pioneer in managing global unconstrained fixed income, Janus said.

“Combining the success and experience of Kapstream’s unconstrained fixed income business with Bill’s reputation as one of the world’s most successful fixed income investors creates a powerful opportunity for our clients and for Janus Capital,” Janus Chief Executive Officer Dick Weil said in a statement.

Gross, Weil and Palghat worked together at bond giant Pacific Investment Management Co (Pimco) for 10 years.

Janus is spending at least $85 million to buy a majority interest in Kapstream, an Australian-U.S. global bond firm that managed $6.6 billion as of March 31. The company said its stake in Kapstream would result in total Janus Global Macro Fixed Income assets under management of $8.7 billion as of March 31.

Janus said the combined Janus Global Macro Fixed Income team, consisting of 15 professionals once the transaction is completed, will operate jointly from Kapstream’s base in Sydney and Janus’s Newport Beach, California, office.

Gross, known as the “Bond King” for his decades-long run of successful returns, shocked fixed-income markets last year when he quit Pimco, which he built into a $2 trillion powerhouse, in September for Janus.

Todd Rosenbluth, head of exchange traded fund and mutual fund research at S&P Capital IQ, praised the moves by Janus, saying, ”The increased asset base and additional resources is a positive as Janus looks for the best bond investment ideas around the world.

“While at Pimco, Gross had a much broader team of fixed income professionals to help with the portfolios he was the lead manager on,” Rosenbluth said in an email. “However, it is unclear if the investment approach will change, either positively or negatively.” (Additional reporting by Sam Forgione; Editing by Jonathan Oatis)

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