Gross co-founded the Pacific Investment Management Co. in 1971 and built a career during a period of falling interest rates, which made shorting debt a losing bet. He led the Pimco Total Return Fund to become the world’s largest mutual fund before investors started withdrawing money in 2013. In September 2014, he was ousted from the firm and jumped to join Janus.
The Janus unconstrained fund has advanced 2.6 percent so far this year, outperforming 70 percent of its peers, according to data compiled by Bloomberg. It has returned 1.7 percent since Gross took over management in October 2014. About half of the fund is Gross’s personal money.
The fund, which Gross co-manages with Kumar Palghat, invests in fixed-income and derivative instruments. It has an effective duration of 1.13 years, a short-term position that aims to reduce exposure to losses if rates rise.
It’s becoming increasingly difficult for money managers to justify their fees or their jobs, Gross said.
“I know that my investors want three, four, or five percent, or else they can keep it in the bank or stuff it in their mattress,” he said.