Bill Gross quitting PIMCO to join Janus Capital isn’t just a Wall Street curiosity, it could disrupt markets.
The Total Return Fund is Bill Gross and it has $221 billion under management. In total PIMCO has about $2 trillion under management. Janus has about $177.7 billion total.
The question is: How many of Bill Gross’ clients at PIMCO follow him to Janus. Judging by the explosion in JNS shares (+35%!), the answer is “a lot”.
Or maybe the bigger question is: How will that money follow him? Do those bonds need to be sold, put into cash, transferred and then re-invested? If so, managing those flows without disrupting the market is an almost impossible task.
Look for any unusual move in bonds over the next few months to be blamed on PIMCO/Janus — whether it’s true or not.
The press release explaining Bill Gross’ decision to quit PIMCO says he wants to get back to his roots and trade more bonds:
“I look forward to returning my full focus to the fixed income markets and investing, giving up many of the complexities that go with managing a large, complicated organization,” said Mr. Gross. “I chose Janus as my next home because of my long standing relationship with and respect for CEO Dick Weil and my desire to get back to spending the bulk of my day managing client assets.”
But you can’t help but wonder if the SEC investigation into PIMCO’s ETF is part of the story.
