Janus Capital, the new home of veteran investor Bill Gross, is making a bet on another Pimco alumnus.
Janus, which oversees about $191bn, has bought a minority stake in LongTail Alpha, the hedge fund Vineer Bhansali started this year after he left Pimco in December. Terms were not disclosed.
The purchase comes at a time when investors are thinking anew about “tail risks” — unlikely but damaging events — in the wake of political uncertainty and concerns over the trajectory of the global economy.
Mr Bhansali said the market cycle is turning over, with low rates, central banks “making their last-gasp effort”, and the increasing presence of algorithmic trading strategies.
“All of those things point to this being more frequent than it has been past,” Mr Bhansali said of market shocks. “The world has changed and what has worked in the past for the last 25 years may not work. You’re going to see all these unforeseen things happening.”
“I’m not saying I can forecast any better than anybody else, but I do think we have a particular skill set in positioning for these things.”
The minority stake is Janus’s latest addition to chief executive Dick Weil’s strategy of “intelligent diversification”.
Janus has been amassing a cadre of former employees from Pimco, the company Mr Gross co-founded in 1971. Mr Weil worked there for 15 years, 10 of which as chief operating officer, before taking the helm at Janus in 2010.
Last July, Janus bought a majority interest in Kapstream Capital, a $6.6bn Australian-based fixed-income manager in a bid to bolster Mr Gross’s efforts. Kumar Palghat was the head of Pimco’s Asia-Pacific portfolio management from 2001 to 2006 and co-founded Kapstream in 2006.
The world has changed and what has worked in the past for the last 25 years may not work [now]
– Vineer Bhansali
Mr Bhansali joined Pimco in 2000 and was the head of the firm’s quantitative investment portfolios, which total almost $50bn in assets.
Mr Gross joined Janus in September 2014 after an unceremonious exit from Pimco, a dispute over which he is now suing.
His arrival helped reignite interest in Janus’s funds, but now Mr Weil is once again dealing with long-term outflows, and net income at the Denver-based company was down 21 per cent in the first quarter.
Janus’s move is also in keeping with a broader trend of financial services companies buying stakes in hedge funds — a bet on the continued growth in the industry despite soured public sentiment amid mixed average performance.
Additional reporting by Stephen Foley in New York