The new managers of the Pimco Total Return Fund have been trumping former boss Bill Gross since he left the world’s largest bond fund, boosted by an opposing bet tied to short-term U.S. interest rates.
Gross went the other way on shorter-term debt after joining the Janus Global Unconstrained Bond Fund on October 6, plowing two-thirds of its net assets into corporate bonds coming due before 2018.
The two sides differed last year on when the Federal Reserve would begin to raise interest rates, with Gross signaling a longer wait than those who replaced him at Pimco. Forecasting that the Fed would tighten as early as June, Total Return’s new managers Mark Kiesel, Scott Mather and Mihir Worah concluded that short-term bonds were overpriced and repositioned the fund, helping it to emerge from a two-year slump and outperform Gross’s Janus vehicle.
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