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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Allianz Ag Muenchen Namen (PK) | USOTC:ALIZF | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.0098 | 0.00% | 280.05 | 280.05 | 295.00 | 280.05 | 280.05 | 280.05 | 20 | 21:00:59 |
By Kirsten Grind
Janus Capital Group Inc. confirmed that the bulk of the money flowing into the new bond fund of star manager Bill Gross came from Mr. Gross himself.
On a conference call with analysts on Thursday to discuss the firm's earnings, Janus Chief Executive Dick Weil told participants that Mr. Gross had invested "more than $700 million" in his Janus Global Unconstrained Bond fund at the end of 2014. That represents a majority of the roughly $1.2 billion that had flowed into the fund from investors in the past few months of the year, according to fund tracker Morningstar Inc.
The disclosure confirmed reporting this month by The Wall Street Journal and stoked some debate within the fund industry about whether Janus should have been more forthcoming with details of how Mr. Gross had managed to build such a large fund in a short period.
Many had assumed Mr. Gross's success at his predecessor, Pacific Investment Management Co., or Pimco, had lured a loyal following of investors.
Janus's initial lack of disclosure is "obviously misleading for people who follow the inflows and assume that it comes from the public," said Tamar Frankel, a law professor at Boston University who specializes in mutual funds and corporate governance.
A Janus spokeswoman declined to comment or make Messrs. Gross or Weil available for comment.
Janus's lack of disclosure until now doesn't appear to violate Securities and Exchange Commission rules.
But legal specialists said the issue is whether or not investors were led to believe that most of the assets in Mr. Gross's fund were raised from other investors.
That is an important point, they said, because new clients in a fund might be more likely to invest if they thought it had the stamp of approval from other, similar investors.
On the earnings call Thursday, Mr. Weil said Janus was having trouble persuading consultants to large institutional clients to invest in Mr. Gross's fund.
"The consultants are famously slow to adopt new things," Mr. Weil said. "Candidly, that's a daily battle we fight. They drive us crazy, we probably drive them crazy."
As for Mr. Gross's investment, Mr. Weil said the manager "fundamentally believes that investing alongside of clients aligns interests."
"He believes in eating his own cooking," Mr. Weil said. "Bill's proud of investing in what we do for a living. We think that should give clients additional confidence in what we do."
Janus on Thursday reported a 22% increase in fourth-quarter earnings. Its shares jumped $2.11, or 13%, to close at $18.39. The company's stock is up 26% from Oct. 6, the day Mr. Gross began running the fund.
Some investors and analysts have cheered Mr. Gross for the investment, saying they are happy he has confidence in his strategy.
When Mr. Gross took over the fund at the end of September following his abrupt departure from Pimco, the Janus fund had just $12 million in assets under management.
In October, the first full month under Mr. Gross, the fund had $360 million in total investor inflows. What wasn't publicly known until the Journal reported it this month was that more than $300 million came from the Morgan Stanley office in La Jolla, Calif., where Mr. Gross's personal financial adviser works. A Morgan Stanley spokeswoman declined to comment.
In a statement at the time of Janus's October inflows, a company spokesman said the firm is "encouraged by the level of interest we are seeing across many of our funds, including our Flexible Bond fund and Global Unconstrained Bond fund, both of which saw meaningful inflows during October."
On the company's third-quarter earnings call Oct. 23, the first after Mr. Gross joined Janus, Mr. Weil spoke of the effects of the manager's arrival. "Everybody is taking our call, everybody is calling us," said Mr. Weil. "It's an extremely busy period. It includes institutional and retail, it includes domestic and international."
In November, Morningstar reported $770 million in total inflows into the fund, but the Journal later reported that about $400 million came from the Morgan Stanley office of Mr. Gross's financial adviser.
"Obviously he's off to a great start raising a lot of attention and assets," Mr. Weil told the Journal in a Jan. 5 article.
Also in November, Janus reported a $500 million investment from George Soros's Soros Fund Management, in a separate account following the same strategy as the Janus fund.
In an analyst note following the Journal's story this month, Citigroup analyst William Katz questioned why Janus would disclose the Soros injection and not Mr. Gross's investment.
It is unclear whether the "more than $700 million" that Janus said Mr. Gross has invested encompasses December investor inflows into the fund, which Morningstar said totaled a net $176 million.
Mr. Gross's fund has lost 1.05% since he began trading on Oct. 6, lagging behind 52% of peers, according to Morningstar.
Sumit Desai, a fixed-income analyst at Morningstar, said the disclosure by Janus should have happened right away, as there are benefits to investors to know that a fund manager is investing alongside the fund.
"It will at least allow the fund to scale up to a level where he can do a better job of communicating his investment ideas at the scale he wants to," Mr. Desai said.
But there also are downsides to investors. If one investor holds the bulk of the shares, there is concern about how the fund would be affected if that investor pulls his money, Mr. Desai said.
Gregory Zuckerman contributed to this article.
Write to Kirsten Grind at kirsten.grind@wsj.com
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