By Brett Arends, MarketWatch
Bill Gross once ruled the bond markets.
But over the last decade of his career you’d likely have been better off investing in his famous stamp collection than in his bond funds.
The former “bond king,” who announced his retirement on Monday, has made a total return for his fund investors of around 50% over the past decade, fund company data reveal.
The investment gains of rare stamps over the same period: About 100% to 200%, says Charles Shreve, the auctioneer handling the sale of Gross’ collection and president of the auctioneer Robert A. Siegel.
‘The best stamps have shown a remarkable increase over the last 10 years. On average, they’ve increased two to three times.’
—Charles Shreve, the auctioneer handling the sale of Gross’ collection
“The best stamps have shown a remarkable increase over the last 10 years,” Shreve says. “On average, they’ve increased two to three times.”
Gross is a well-known philatelist and is now in the process of selling off his extensive collection. He is expected to generate more than $50 million, Shreve says.
Gross also told Barron’s Mary Childs last October that his stamp collection had “generated returns better than bonds, not as good as stocks.”
Gross could not immediately be reached to answer specific questions.
In a retirement statement made through Janus Henderson, he admitted his most recent fund had underperformed cash over the past four years, but noted it had nonetheless made a positive return. He added that his “currently existing Total Return strategy” /zigman2/quotes/206986610/realtime PTTRX +0.22% had outperformed benchmarks.
Gross launched PIMCO in 1971 and at one point built the Total Return Fund into the world’s biggest mutual fund. PIMCO data show that his fund outperformed its benchmark, the Barclays Aggregate Bond Index, by a wide margin from its launch in 1987 through the late 2000s.
Since 2014, Gross’s Global Unconstrained Bond Fund has generated gross returns of 1.4%, far behind the overall bond market index.
By that time, he was widely considered the leading private-sector voice in the bond market, and his comments moved markets and influenced policy.
“No other fund manager made more money for people than Bill Gross,” said fund research company Morningstar in early 2010, when it named him the “Fixed Income Manager” of the previous decade. Investors in his fund were “$47 billion wealthier for the decade” thanks to his management, they calculated .
Gross quit PIMCO abruptly in 2014, and took over the new Unconstrained Bond Fund /zigman2/quotes/209617174/realtime JUCAX +0.12% at rival Janus Henderson. Since then, he fought a high-profile legal battle with PIMCO, claiming he was forced out, and demanding $200 million in severance, and in a long-running and bitter divorce battle with his wife of 32 years.
Over the past decade, Gross’s total returns have added up to just under 50%, fund data show. The period from 2009 through 2014 at PIMCO was ahead of the market, with a gain of 46% versus a 31% gain for the Barclays Aggregate bond index.
But since 2014 Gross’s Global Unconstrained Bond Fund has generated gross returns of just 1.4%, far behind the overall bond market index, its average competitor, or even cash. It had a strong performance in 2016 and 2017, but plunged last year as it got whipsawed by markets.
How much has his stamp collection has increased in value? We’ll find out more detail as it’s sold off over the next couple of years. Data supplied by Elroy Dimson of Cambridge University says a broad index of stamps, heavily weighted towards British stamps, has performed comparatively poorly over the past decade.
But Shreve at Robert Siegel says Gross has focused his collecting on the high end, and American stamps, where prices have risen strongly.