Soros Hands Gross $500M Vote of Confidence

George Soros has backed Bill Gross’ new strategy at Janus Capital to the tune of $500 million.

It is Gross’ single biggest mandate since he joined after quitting PIMCO at the end of September.

The investment will be managed in a separate strategic account outside of Gross’ Janus Global Unconstrained Bond mutual fund, the company said in a notice on its website. With the investment sitting outside the main fund, Soros is protected from the effects of inflows and outflows from other investors.

Via Janus Capital’s Twitter account, Gross said he was “honoured to be managing a new unconstrained strategic account for Soros Fund Management”.

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According to Reuters, Soros Fund Management’s CIO Scott Bessent met Gross soon after he quit PIMCO to discuss a potential investment.

The investment more than doubles the assets currently run under the Global Unconstrained Bond strategy, which swelled to $442 million by the end of the month after inflows of more than $350 million, according to Morningstar.

It will also act as a significant vote of confidence for Gross at his new employer. Billions of dollars have exited PIMCO and its Total Return fund, the flagship fund he ran at the firm, following the company co-founder’s departure, but investors have not made the straight switch to Janus.

On making the switch to Janus, Gross claimed his new role would allow greater flexibility to focus on investing without the burden of running a large organisation. He also cited the far smaller size of the new fund as allowing him to operate under the radar of many other bond investors.

Soros Fund Management runs more than $28 billion. It was shut to external investors in 2011 and became a family office to manage Soros’ fortune, led by CIO Bessent.

Next month Chief Investment Officer will publish an in-depth investigation into the decline of PIMCO in 2014 and the impact of Gross’ exit. Subscribe now to the magazine or email alerts to receive your copy.

Mercer is to buy a Swiss fund manager to expand its access to private markets, the company has revealed.

The consultant is to acquire SCM Strategic Capital Management, subject to regulatory approval, to expand its advisory and outsourced investment reach. SCM has invested $11 billion in private markets since its inception in 1996 and advises or manages portfolios with a net asset value of $4 billion.

“Increasingly our investment clients are seeking advice regarding alternatives investment strategy, either through a custom portfolio or a delegated solution,” said Phil de Cristo, president of Mercer Investments, adding that the company already had good reach in the sector.

In January 2012, Mercer announced a structure shake-up that would see it better poised to act as a fund manager on behalf of its clients, rather than just offer them advice.

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At that time, de Christo said: “Investments is a high-growth business for Mercer that has grown at a double-digit rate over the past nine quarters.”

This growth has continued with the firm today citing funds under management of $108 billion around the world.

Announcing the acquisition of SCM, de Christo said Mercer clients had been demanding more access to alternatives through its channels. This meant, de Christo said, that it would retain SCM’s investment team, based in Switzerland. SCM is a specialist in private equity, real estate, and infrastructure.

For its part, a note on the Swiss manager’s website said a “new chapter in the history of SCM” was about to start.

“As a result of the merger, SCM will be functionally integrated into the private markets business of Mercer Investments and the number of private markets investment professionals will increase from about 30 to about 50 globally,” the note—penned by the founder and CEO Stefan Hepp, and the CIO Ralph Aerni—said. “Besides staff in Zurich, London, and Frankfurt, the combined entity will have a significant presence in the USA where SCM has no offices to date. The Asian presence will be increased in Hong Kong and extended to Australia.”