in some cases, was rewarded with the crown of ‘greatness.’ Perhaps, however, it was the epoch that made the man as opposed to the man that made the epoch.”56 As the second largest mutual fund in existence with over $230 billion of assets as of the end of April 2014, Bill Gross, like Warren, may have a difficult time delivering a similar level of alpha in the future. Gross’s fund has suffered a spate of withdrawals. In April of 2014, investors withdrew $3.1 billion in the twelfth straight month of withdrawals which have totaled $55.3 billion. Over those past twelve months, PTTRX has trailed Barclays Aggregate Bond Index by 1.45 percentage points57. Adding insult to injury, Morningstar downgraded PIMCO’s overall stewardship grade from a B to a C in the face of the public falling out between Bill Gross and his former co-Chief Investment Officer Mohamed El-Erian. Recently, Mr. Gross joined the ranks of Warren Buffett and Peter Lynch in giving a solid endorsement to indexing in his December 2013 Investment Outlook letter while reminiscing about his younger days when Jack Bogle introduced the first index fund available to retail investors: “His [Bogle’s] early business model at Vanguard promoting index funds was a mystery to me for at least a few of my beginning years at PIMCO. Why would most investors be content with just average performance, I wondered? The answer is certainly now obvious; an investor should want the highest performance for the least amount of risk, and for almost all measurable asset classes, index funds and many ETFs have done a better job than
Published on Jun 1, 2015
This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...