Pimco’s Gross Tells Clients 2011 a ‘Stinker’ as Total Return Trails Rivals

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http://www.bloomberg.com/news/2011-10-14/gross-tells-clients-2011-was-a-stinker-as-he-misjudged-economic-slowdown.html

Bill Gross, manager of the world’s biggest mutual fund, sought to reassure clients that he hasn’t lost his touch after he misjudged the extent of the economic slowdown, causing his Pimco Total Return Fund to trail rivals this year.

“This year is a stinker,” Gross wrote in an October letter to clients titled “Mea Culpa,” a copy of which was obtained yesterday by Bloomberg News. “There is no ‘quit’ in me or anyone else on the Pimco premises. The early morning and even midnight hours have gone up, not down, to match the increasing complexity of the global financial markets.”

Gross’s $242.2 billion Total Return Fund returned 1.3 percent this year through Oct. 13, lagging behind 82 percent of peers, according to data compiled by Bloomberg. That’s his worst performance relative to rivals since at least 1995, the earliest year for which Bloomberg has rankings for Newport Beach, California-based Pimco’s flagship. Gross shunned Treasuries in the first half of the year, missing a rally as investors rushed to the safety of government-backed debt amid the European sovereign-debt crisis.

“As Europe’s crisis and the U.S. debt ceiling debacle turned developed economies towards a potential recession, the Total Return Fund had too little risk off and too much risk on,” Gross wrote.