Meet the New Bond King

By Kirsten Grind 

MALVERN, Pa.--Vanguard Group's Joshua Barrickman has one follower on Twitter, has never appeared on business TV shows, and even some of his own investors don't recognize his name.

Yet by one closely watched metric the 39-year-old money manager is about to be crowned the country's new bond king.

A bond mutual fund run by Mr. Barrickman is poised to depose as early as next month Pacific Investment Management Co.'s flagship Total Return fund as the largest by assets, ending a 17-year reign associated with star manager Bill Gross. Roughly $10 billion separated the funds at the end of February, as investor flight triggered by Mr. Gross's abrupt departure from Pimco last September put Mr. Barrickman's Total Bond Market Index fund within striking distance of the No. 1 spot.

Reserved and soft-spoken, Mr. Barrickman said he doesn't aspire to Mr. Gross's old throne. "I've got quite a bit of razzing about that here," he said on a recent morning at Vanguard's suburban Philadelphia headquarters.

The toppling of Total Return would mark a significant turning point in the otherwise staid world of bond investing, as investors flock to plain-vanilla funds that follow market indexes rather than relying on money managers to pick winners.

No one in the bond world has benefited more from this shift than Mr. Barrickman, who won a scramble for cash following Mr. Gross's Pimco exit without any advertising or sales pitches. His fund, which tracks a version of the Barclays U.S. Aggregate Bond Index, gained nearly $15 billion in client commitments during 2014, while Pimco Total Return lost roughly $103 billion, according to fund research firm Morningstar Inc. The bulk of the shifts came after Mr. Gross's departure.

At the end of February, the Vanguard Total Bond Market Index fund had $114.9 billion of assets, compared with $124.7 billion for the Total Return fund.

The king-in-waiting is the opposite in many ways of Mr. Gross, who had much greater control over his investments at Pimco Total Return. He now runs another bond fund for rival Janus Capital Group Inc. and declined to comment through a spokeswoman.

At Pimco, Mr. Gross earned more than $200 million annually and operated from a desk that was among the largest on the trading floor, flanked with multiple computer monitors and Bloomberg terminals. At Vanguard, Mr. Barrickman's compensation is a fraction of what Mr. Gross made, and his desk is the same size as his colleagues. His sparsely decorated office became 55 feet smaller when the fixed-income team moved to a new, larger space recently.

The temperaments of the two money managers contrast sharply, according to people close to them. Mr. Gross was known inside Pimco for outbursts and boasts, once comparing himself with the famed racehorse Secretariat, according to people familiar with the matter. Inside Vanguard, where most fund managers keep a low profile, one co-worker said he has heard Mr. Barrickman raise his voice only when negotiating bond sales with Wall Street banks.

Mr. Gross is a regular fixture on financial TV shows and well-known for his long monthly investor letters discussing everything from his dead cat to his body fat. Mr. Barrickman doesn't often communicate with clients or the outside world. In a rare blog post last December on Vanguard's website, he sought to dispel the myth that index funds are run by computers instead of people.

Mr. Barrickman said he doesn't care to compete for the biggest personality in the business. "That's not my style," he said.

Pimco's flagship bond fund was the better performer over the past five years ended Friday, with average annual returns of 4.88%, compared with 4% for Vanguard, according to Morningstar. But Mr. Barrickman's fund nearly matched the index it tracks, which earned 4.2% during the same period.

"His job is not to beat it," said Thomas Boccellari, a Morningstar analyst. "That's what he's getting paid for, giving you whatever the index is doing."

One client said he hasn't heard Mr. Barrickman's name before and likes it that way. "We would prefer not to have a star manager making market prognostications about what interest rates are going to do," said Richard Bryan, a financial adviser who has more than $100 million of client money with Mr. Barrickman's fund and worked at Vanguard for more than eight years.

Mr. Barrickman grew up in Ashtabula, Ohio, where he initially thought he might be a stock picker. His grandfather, an avid follower of the market, frequently met him at the library after school to discuss stock prices and companies. He met his wife, Lisa, in Ashtabula, where the two as children once donned bunny costumes for a school play.

While studying finance at Ohio Northern University, Mr. Barrickman said he was drawn to bonds because "ultimately it's a stream of income that has some value to it and you can make decisions based on what you think that stream of income is worth." He went straight to Vanguard after graduate school at Lehigh University, and within several years was assigned to the bond index desk. After 15 years, he now heads up all of bond indexing across the U.S. and Canada at the firm.

At Vanguard, his team of 15 people spends all day on the phone with Wall Street dealers acquiring or unloading bonds to make sure the fund's holdings and returns match its selected index. Mr. Barrickman's job is to make sure a large investor deposit or a bond downgrade doesn't throw his fund out of whack with the index, which comprises more than 9,000 bonds.

"We control things to a point that a mistake will not hurt us," Mr. Barrickman said.

Mr. Barrickman's home life in suburban Philadelphia is equally regimented. On the refrigerator, a detailed schedule lays out the week: school play practice for 12-year-old Ellie and basketball games for 10-year-old Jack.

Dinner is mapped out for each night in advance, except for Sunday, when it is always Mr. Barrickman's turn to cook. His wife is a stay-at-home mom, community volunteer and Sunday school teacher.

Interest in Mr. Barrickman is puzzling to one member of the household. His son, Jack, recently told his parents that he didn't understand why his dad "is such a big deal."

Write to Kirsten Grind at [e-mail]

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