Bond King Bill Gross Falls to the Middle of the Pack

Bill Gross once oversaw $2 trillion in assets and was named fixed-income manager of the decade in 2010 by mutual funds researcher Morningstar Inc. A 2004 biography called him “the bond king.” In an era of index investing, he’s one of a handful of mutual fund managers—much less bond fund managers—whose name is known outside Wall Street.

But as he approaches the third anniversary of his noisy ouster from Pacific Investment Management Co., the company he co-founded and built into the world’s largest bond manager, and his move to a new fund, Gross’s performance has been merely OK. Three years is an important milestone for a money manager, because that’s when many financial advisers and institutional investors decide his track record is long enough to be meaningful. “At one time, Gross had superstar results,” says Stephen Janachowski, a former Gross investor whose Mill Valley, Calif.-based wealth management firm oversees $1.6 billion. Gross owes his fame to one of the great market-beating records in money management, with his main fund, Pimco Total Return, outperforming 96 percent of its peers over the 15 years before he left, according to Morningstar. “Can he duplicate what he had before at Pimco? So far, it hasn’t shown up,” Janachowski says.