Gross jumped to the firm now known as Janus Henderson Group Plc, and after failing to replicate his earlier success at Pimco, he retired from asset management in 2019.
In the essay, the legendary investor conceded that his reign at Pimco was bolstered by a four-decade bull market in bonds that ended as the Fed embarked on its fastest policy-tightening campaign since the 1980s. But Gross also claimed that “non-index strategies” set him apart, citing success in navigating the global financial crisis.
Gross acknowledged that even a low-duration fund would have struggled this year as bond yields surged. “But -15%?” he lamented. What should a total-return fund have done? “This year, a 2% average yield could have been bolstered by defensive credit and yield curve strategies that were alpha generating,” the investor wrote. “My suggestion? Change their names, or perform their original mission of returning current bond market yields plus alpha from non-durational sources.”
Instead of a total return fund, lower-cost exchange traded funds investing in inflation-protected bonds, such as iShares 0-5 Year TIPS Bond ETF (STIP), would be a better option for investors, according to Gross.
—With assistance from Michael MacKenzie.
This article was provided by Bloomberg News.