Prepare for a New Financial Era, Gross Says

“There is a new financial era. Accept it and modify your behavior accordingly, so that your future is safe, secure, and you look forward to a brighter tomorrow,” says Bill Gross.

In his first investment outlook letter as portfolio manager of the Janus Global Unconstrained Bond Fund and related strategies at Janus Capital Group, Gross briefly addressed his departure from PIMCO, the company he co-founded.

“Had there been a reasonable way to continue there, I would have stayed to my last breath. I was honored by the trust of the millions of clients and thousands of employees over decades. They have been the center of my life’s work. I am very proud of my record there for more than 40 years,” he says. “PIMCO is a great firm with lots of great people, and Allianz was a fine owner for many years. But slowly and with great hesitation, I came to understand that it was time for me to leave. It happens sometimes to founders! But that is water under the bridge, as they say. I don’t plan to address it further.”

To the question of why he chose to join Janus, Gross explains: “I want to return to a simpler role, completely focused on markets, investment performance and serving my clients. It seems like a good time to turn away from the complexity of helping to run a huge firm.” Gross notes that he had a 20-year relationship with Janus CEO Dick Weil—including a full decade during which Weil worked for Gross as PIMCO’s chief operating officer. “When I asked him whether Janus might provide me with that simple opportunity, he responded with a very enthusiastic ‘yes’ let’s dance together… I am not ready to retire, so here I am.”

Gross compares what is happening now in global economies to a cycle that “has begun to resemble the last stages of a 1920s marathon, with partners clinging to each other in a desperate attempt to keep from falling down.” He warns that “returns almost necessarily cannot equal the magnificent prior decades that some of you might have experienced during my days at PIMCO.” He, of course, still advocates for an “unconstrained strategy” for investing.

On a personal level, Gross says the obvious advice is, “Retire later, save more, accept a revised standard of living.” But, he notes that financial advice varies with an investor’s age and willingness to take risk. “So, one size does not fit all here. It never has.”

Gross’ investment outlook is here.