Janus Takes Stake in Ex-Pimco Manager Bhansali’s Volatility Firmby
LongTail Alpha’s strategies constructed for unstable markets
Bill Gross, CEO Richard Weil are among Pimco alumni at Janus
Janus Capital Group Inc. has taken a minority stake in LongTail Alpha, a firm founded by an alumnus of Pacific Investment Management Co. that focuses on investing in volatile market moves. Terms weren’t disclosed.
LongTail Alpha, founded by Vineer Bhansali after he left Pimco in December, plans at least two strategies that may be available for clients in separate accounts or funds, the firm said Wednesday in a statement.
“Most market participants have been conditioned over two and a half decades of falling inflation, low volatility and central bank effectiveness into thinking about investing in a specific way,” Bhansali said in the statement. “We believe that many of these macroeconomic conditions have already changed, and we are in the early years of a multiple-decade environment in which very different techniques for portfolio construction will be necessary.”
Janus Chief Executive Officer Richard Weil came to the firm in 2010 after a career that included more than a decade at Pimco. Janus, which had $191 billion under management as of March 31, has diversified into new investing strategies under Weil through acquisitions and product launches. In 2014, Weil hired former Pimco Chief Investment Officer Bill Gross to manage its Global Unconstrained Bond Fund, which now has $1.4 billion.
Last year, Janus acquired a majority interest in Kapstream Capital, a fixed-income manager based in Sydney. In June, Janus launched thematic exchange-traded funds, including ETFs focused on investments targeting obesity, long-term care and fitness.
The global market volatility following the so-called Brexit vote on June 23, when the U.K. surprised investors by choosing to quit the European Union, provided a test of Bhansali’s methods. In an interview earlier this week, he said clients who used his hedging strategies may have gained as much as six times their premiums if they timed their bets correctly. Those strategies used derivatives to short equity indexes, wager on long-duration debt and take currency stakes correlated to stock market moves.
“One important thing: If you didn’t take hedges relatively quickly off the table, you would’ve given a substantial portion back,” Bhansali said in the interview.