Bill Gross: “I’m obsessed with beating everybody”

Bill Gross is wrapping up his best quarter since taking over the Janus Global Unconstrained Bond Fund.

The fund has returned almost 2 percent this year and ranks in the top 11 percent of his Morningstar Inc. peers.

While three months is a brief record for mutual fund managers, Gross said his performance bodes well in the trading arena he dominated for decades at Pacific Investment Management Co., prior to his September 2014 ouster.

After jumping to Janus Capital Group Inc., the fund manager said in March 2015 that he had two to four years to prove that he could still beat the competition.

He’s outperformed in 2016 by holding emerging-market securities that others shunned, and by writing income-producing swaps contracts to spice up returns in an era of low or negative interest rates.

The fund, which Gross co-manages with Kumar Palghat, had an effective duration of 1.13 years at the end of February, a short-term stance that he said protects against interest-rate movements while exposing him more to credit, currency and volatility risk.

“If we can’t make money on pure bonds, let’s make money on these other things,” Gross said.

The fund has benefited from a recovery in hard-hit developing markets. Thirty-six percent of assets were in emerging markets as of Feb. 29, mostly Latin American debt, according to the Janus website.

The top 10 positions included the sale of credit default swaps to protect against swings in Brazilian and Mexican debt.

“I’m obsessed with beating everybody,” Gross said in the interview. “I’ve got my list of 50 competitors and I’ll be damned if I don’t look at every one of them.”

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