That is the argument of indexers. It is indeed hard to find active fund managers who can beat the index over long term. Those who take the most risk would have greater
standard deviations in their returns, which means they may appear to be much better than everyone in some years. Having said that I do own active funds, but keep a close eye. The only funds which I have owned for a long time (around 10 years) are FPACX, OAKBX and MACSX. More and more of my portfolio (started off with about 40%, but it has increased to about 50% because it did better than the rest) is in ETFs. There does seem to be some short term persistence in performance which I try to exploit.

I am a long time FAIRX investor and I sold everything today. this is looking like a replay of 2011 when BB was down over 30% in an up market. I held off selling before because of the tax hiT on my gains over the years but finally decided just to take the hit. What he is doing with a number of positions feels to me like gambling and not value investing

c'mon junkster! you should take it less personal! you promised to keep out and enjoy your daily positive hy muni performance -- so the rest of us, classically diversified, could just sit there green with envy!
yes, the vanguard guy who advised rjb was wrong. yes, you have dozens of years of experience, and some of us are in the industry, but rjb decided to doubt us, even if the cursory understanding of asset class and spreads would give him a clue. be kind to him; he also invested with berkowitz and that didn't quite work in the last couple of days. some people pick up very sophisticated -- hedge fund like - strategies without a clue as to what they invest in and how market, credit events, or interest rates affect their investments. the cure for this is to either relax and trust the manager, or index the hell out of your investments. alternatively, get an education. but who would listen? so people go from board to board, broker to broker, and ask questions of random strangers without capacity to evaluate the answers. oh, well.
fa

I'm not even gone for a day and someone e-mails about this thread. Robert, seriously, you need to get your act together. I discussed as did fundalarm the two ways bond funds pay their dividends. We described how funds like the one you keep harping on pay their monthly dividends and we also described how others, the majority in open end bondland such as PONDX pay out theirs. With just about every bond fund I ever traded or invested in the dividends accrued daily and you were paid end of month for however long you were in the fund. Fundalarm and I never said that the one you keep harping on that the dividends accrued daily!!! My comments below from this thread! If you are going to accuse someone of being incorrect, at least get your facts straight!!! Edit: you also might want to list the symbol of whatever you are harping on. BND and VBMFX both Vanguard total bond index funds pay out their dividends differently.

it wasn't... bond funds accrue daily dividends in their NAV, not like stock funds. the decline you saw was a market decline - movements in spreads -- see my previous explanation.

Some bond funds (like PIMCO's) do that. Others, like RPHYX, declare monthly, while a few even declare quarterly (Loomis Sayles used to do that until they switched to a monthly calendar a few years ago).
As always, read the prospectus. The PIMCO bond fund prospectus says that its funds covered in that prospectus (with a couple of exceptions) declare daily.

agree that no one, but some retail will follow Gross to Janus. No institution would do it without sufficient due diligence which takes three years for any consultant or fiduciary.
in term of working the phones and imposing himself on doubleline and then janus (thanks to a former colleague), it is curious to say the least. not to mention that janus, after the era of scandals, took great pains to shed the 'star manager' approach and craft a careful corporate investment management culture -- which was totally destroyed on friday.
why can't a 70 year old billionaire negotiate a graceful leave and quietly retire? in a year or so, if restless, he would do something else. this looks like action of desperation. he has not been a 'true' manager for years - he's been a 'talking head' and a decent economist, but not truly a PM. he should have handled this more like an adult...

While I realize there will be individuals and some institutions who will follow Mr. Gross, his sauce was not secret any more. There are numerous other fixed-income options available to investors that do not have a so-called star manager in charge, that have managers who actually put a premium on running their fund (and not getting in front of every camera they can find) and providing shareholders with real value. For every Bill Gross and Jeff Gundlach there are multiple Carl Karufmans, Dan Fusses, Michael Hasenstabs, Dan Ivascyns, and Jason Bradys, to name a few.
The curious thing for me is that he has hooked up with Janus. Personally I would not invest a dime of my own or my clients money with Janus, given their past history of executive illegal actions that resulted in the firm almost collapsing. There was never any real corporate action that enumerated how they would re-build investor trust, let alone much of an apology for the crappy things that happened. I can only look at this as a way for Janus to gain a huge influx of dollars under management. They went from being one of the top no-load fund companies to a struggling group that offers more share classes of their funds than almost anyone else, whatever works to make the sale. And as for Mr. Gross hooking up with Janus, like most everything else in this world, follow the money. Perhaps this is a case of the two parties being made for each other.

@msf, a good piece of detective work you did. Good to know. I bet most of the shareholders in Harbor Bond and Harbor Unconstrained Bond invested there because of Gross. I recall many years ago, M* recommended people investing in Harbor Bond as a cheaper way to get access to Bill Gross' investing skills than Pimco Total Return.

I don't grasp why institutional groups would bail out of PTTRX at this point. If they were acting on their fiduciary responsibilities, they would have bailed 2-3 years ago. That is when bad calls and blooey commentary really started to affect the fund. And my guess is that very few of these fiduciaries could enumerate the derivative trading that Mr. Gross used. They simply accepted it. Perhaps the proper response would be to put the fund on watch for 6 months.
The real test will be if these so-called fiduciaries follow Mr. Gross to Janus. How will they explain/justify moving to a company with a former history of corruption. At least PIMCO has been pretty clean in that regard.
It has always amazed me that so many of our client's employer 401k plans have had PTTRX as the ONLY fixed-income option. DUH!

I not only disagree with this Josh Brown, some of what he is saying is total BS. Take a look at the chart of PTTRX right after Gross made the call. There is a marked difference away from the aggregate bond index, but following that a marked difference toward the index. What about all the correct calls Gross made for so many years?
Everyone is an "expert". They know the "one thing" that caused Gross' downfall. Assets went down from 290B to 220B, right? WTF made assets go up to 290B in first place? Gross had nothing to do with it?
Let's be honest here. Gross may not have been Puss N Boots, but no one had any trouble with him as long as PTTRX assets, if not its performance were in an upward trajectory. I would hardly call Gross an underdog, but I'm starting to think he was not the only "problem" at PIMCO. They can't say "we were already contributing to the investment decisions" AND then also blame Gross completely for his "bad call" on treasuries. This is the same as capitalizing profits and socializing losses. Not to mention, all individual investors are idiots for chasing performance, but when institutions do it after Gross's "bad call", there is no focus on it.
I'm sticking with Robert Arnott for PAUDX in the IRA. I've already reduced my PTTRX stake to 50% of what it was in the 401k. I'm putting my PGMDX stake in IRA on notice. El Erian didn't do diddly here because he was allegedly cleaning up Gross' s*** that he was tired of doing, instead of cleaning his own. Now that I learn Mihir Worah is a nuclear physicist, it might be prudent to look for manager with PhD in finance. Not to say I have anything against physicists, but I typically don't hire them to manage my money.

What am I missing? Why are people so enamored with Gross opening a new fund? Isn't this the same guy who has guided the PIMCO Total Return fund to mediocrity with some pretty bad calls in the last 5 years? Per M*, 65% of all intermediate-bond funds have outperformed his flagship fund.

I'm not seeing that 65% of all intermediate bond funds have outperformed his flagship fund. Looks to me like Gross outperformed his category nicely, in all time periods longer than one year. Am I reading this incorrectly?

As a Janus investor with "D" shares for years, I used to be able to make exchanges on-line for little as $100.00 into new non-taxable accounts. I logged into my account to make a small exchange from one of my other accounts on-line into the unconstrained bond fund only to "flagged" by the on-line system. Now you can open an account (at least non-taxable in my case) for little as $500.00 with a minimum $50.00 subsequent monthly investment or a minimum of $1,000.00 to start.

PIMCO is, and has been for a few years, MUCH more than Bill Gross. They already have, and have had, a team approach on the investment committee that sets the macro outlook for the firm's funds, a top-notch analyst staff, and a solid group of fund managers whose initials aren't BG. .

I don't disagree with you. However, I've seen two people from Pimco in the media: El-Erian and Gross and moreso the latter. The lack of an apparent attempt to groom a new public face for the company makes me think that there was little planning for the eventuality of a Pimco without Gross. Along the same lines, I think it's Pimco's fault for focusing so much on Gross that it made the company reliant upon him and the public perception that Gross IS (well, was) Pimco.

PIMCO is, and has been for a few years, MUCH more than Bill Gross. They already have, and have had, a team approach on the investment committee that sets the macro outlook for the firm's funds, a top-notch analyst staff, and a solid group of fund managers whose initials aren't BG. I think there's WAY too much of the heroic-CEO-uber-alles POV being expressed in the financial media and here at MFO about Gross's move out. It's a GOOD thing for PIMCO, maybe not for the TR fund and etf for now, but for the firm as a whole.

Still no wage growth as skilled-worker shortage complaints rise
http://blogs.marketwatch.com/capitolreport/2014/09/29/still-no-wage-growth-as-skilled-worker-shortage-complaints-rise/
This is another piece of the puzzle for me and that inflation will not be an issue for awhile - years?
Wages aren't rising, yet food and energy prices are high. This is the opposite of the wealth effect (people spend because that feel good). People are fearful and are sucking up price increases - either from savings or debt.

I have no horse in this race. IMHO looks like a slow motion train wreck going back over several years. Now with SEC problems on top of this it will be a year at a minimum before this the dust settles out at best! You can't turn a ship this big on a dime.
Just my 2 cents.

FYI: Health care mutual funds have outpaced the broad stock market in the past 15 years, with the pace of outperformance picking up in the past two years.
A $10,000 investment in the average health care fund on June 30, 1999, would have ballooned to $43,820 by Sept. 24, 2014, according to Morningstar Inc. data.
Regards,
Ted
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I agree MikeM. Bill Gross is not the same person he was just a few years ago. Reports of him blowing up at Pimco plus the antics he pulled at the conference earlier this year suggest it may be past time he retired.

What am I missing? Why are people so enamored with Gross opening a new fund? Isn't this the same guy who has guided the PIMCO Total Return fund to mediocrity with some pretty bad calls in the last 5 years? Per M*, 65% of all intermediate-bond funds have outperformed his flagship fund. This is a guy who has consistently had problems playing in the same sandbox with his associates. The guy whose sanity was questioned during the Morningstar Conference earlier this year. And remember, Janus does not have the same bond analysis strength as PIMCO. Not even close.
I've never been a PIMCO fan though I do own PONDX. I think I didn't like PIMCO because of Gross and I think PIMCO will be a better fund-shop without him. I do like and respect Ivascyn. Maybe because Ivascyn stays out of the lime light and lets his record do his talking.
There are just to many other good unconstrained bond funds with good stable management to choose from to take a 'gamble' on Gross, IM<HO. I may be proven wrong?

"Up to 30 percent of Pimco's assets could now leave the firm, Sanford Bernstein estimates. "
Would that be the 30% give or take that left Pimco Total Return ($292B to $221B in the 16 months ending 8/31) because Gross was managing it, or the 30% that may leave because he will no longer be managing it?
As the article points out, people look not only at the name but at the performance. When Gundlach left TCW, he was at the top of his game; Gross has been at best mediocre for several years. So what I expect to see in columns is evidence of confirmation bias - each writer will read into the numbers whatever he or she wants. It won't be easy to sort out the root causes of money movement, and the financial "reporters" won't even be trying.
My own personal bias is that I believe good performance (to the extent it is based on skill) is due to a combination of skills of the whole team - analysts as well as the fund manager(s). They serve different roles all of which are needed. Gundlach took a good chunk of his team with him (or so I understand). I don't expect Gross to have as much success with that.
I look at Mutual Series - many people expected it to fall apart after it was acquired by Franklin and Michael Price gradually faded away then left. But the funds performed quite admirably, especially in the first several years after the Price era. The organization seemed to hold together.
And speaking of Mutual Series, how did another wonderkind fare - David Winters? He was supposed to do great things and draw all sorts of money. His fund has subpar performance. He has drawn over $1B in investment, which gets him into the top quintile of World Stock funds by assets. But he didn't seem to draw money from his old charges at Mutual Series (MDISX - $26B, MQIFX - $6B).
Where I think Gross does have an advantage is curiously where most commentators criticize him - management experience. When these other fund managers left, they had to form whole new organizations - using skills that for them were untested. Gross, though he's joining an existing family (Janus), is being given his own playpen to build. So he still needs to apply organization building skills. That's something he has experience doing - having built PIMCO.
I keep writing because I think there are a lot of different facets here, and everyone (including myself) is going to pick and choose. Raw numbers (outflows, inflows, performance) alone won't tell the story. Anecdotes won't either. We need to keep everything in mind when guessing what will transpire, or analyze what did happen six months down the road.

Fantastic.
Nice and even summary by Conseulo. Full disclosure,
Classic, deep value investor.
Time will tell...should know in next few years whether he was right.
Trust he's applying same process to SHLD.
c

FAIRX is one of 3 funds I hold in both pre and after tax accounts, and so it is one of my largest fund holdings. I am quite comfortable with the AIG position. I do believe that the Fannie and Freddie outcome could serve to place a pretty long-lasting label on BB...for better or worse.
It was a good interview with BB, but to be realistic, I can't really say it was a "nice and even summary" if she didn't even mention SHLD. That was a startling omission.

Hi V/F …
I think he wants to show that the “old” B/G still has the gusto when it comes to running a mutual fund … I wish him well even though I have not had much money invested with him and/or at Pimco. Currently, I have a little better than three percent of my money with Pimco and that is in PASAX who is run by Rob Arnott and is a fund of funds. I going to watch it closely and have placed it under review. That is the second time it has been under review in the past two years.
I don’t think I’ll be following B/G with any money into his fund at Janus. I recently moved some money into Kathleen Gaffney’s fund at Eaton Vance. So far, I like how she has positioned this fund and its results so far.
With Mr. Gross being around seventy years in age … Well, just how much longer can he skipper a fund?
Old_Skeet