Bill Gross Defends His Record

Last year was a time of change and controversy for Bill Gross: His unplanned exit from Pacific Investment Management Co. in September, a whisper campaign before the palace coup, a new job at Janus Capital.

Amid all this, Gross is most upset about one thing: Despite 40 years at the top of the fixed-income world, he believes his recent track record has been misunderstood or misrepresented.

After we published a column last year on his compensation at Pimco, he wrote me to complain that his performance numbers were much better than reported, especially for Pimco’s flagship Total Return Fund (PTTRX), the world’s biggest bond fund.

He wanted to know if Bloomberg was willing to look into the data and “set the record straight.” Since we splashed his 2013 bonus of $290 million all over the Internet, it seemed only fair to do so.

Hence, today’s column deals with three things: Total Return Fund’s performance during the past few years, the performance of the five closed-end funds Gross managed at Pimco, and the strength of Pimco as an asset gatherer, driven in large part by Gross, particularly since 2011.

Continues here

 

 

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  1. machinehead commented on Jan 12

    Excellent article, thank you. This statement might need deeper digging:

    ‘In the aftermath of the financial crisis, while other funds were dumping securities known as auction-rate preferreds, Gross quietly bought them at fire-sale prices.’

    In the case of the highlighted fund PTY, no auction-rate preferreds are shown in the fund’s assets. But it does have $325 million of its OWN auction-rate preferred outstanding, which serves to leverage the fund’s returns. Note 7 of PTY’s annual report (page 43) states that since Feb 2008, “regularly scheduled auctions for ARPS issued by the Fund have consistently failed.”

    https://investments.pimco.com/Regulatory/External%20Documents/PTY_AR.pdf

    Strange also is that Gross’s name nowhere appears in the PTY annual report dated 11/30/2013. Was he managing PTY, or simply recommending it to folks on the streets of Newport Beach?

    ~~~

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  2. intlacct commented on Jan 13

    Dunno about the bogeys. PXTIX, which Gross was listed as the manager on, uses the S&P 500.

    https://investments.pimco.com/Products/pages/305.aspx

    I used to wonder how he could manage so many funds. I recall seeing him listed as mgr on a number of funds (not mentioned in the article). Which may explain the growth. But I recall them initially overperforming and post about 2011 or so underperforming.

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