Bill Gross: Fund has recovered from worst day ever, still confident in his ‘trade of the year’

Finance news

Bill Gross hasn’t changed his investing outlook since his bond fund took a beating recently. Investors just need to be patient for his trade to work out, he told CNBC on Wednesday.

On May 29, the portfolio manager’s Janus Henderson Global Unconstrained Bond Fund had its worst day since its 2014 launch, falling nearly 3 percent. That’s when Italian political concerns caused volatility in the bond market.

Gross conceded the fund’s performance has been more volatile than usual.

“All of the bad trade numbers on that one particular day have been made up. The fund is up 2.5 percent over the past several weeks,” he said on “Power Lunch.”

He’s still banking on what he’s calling the “trade of the year,” which is a bet that German bond prices will fall while U.S. Treasurys will rise.

The 10-year German bund yield is nearly 0.50 percent, while the 10-year Treasury yield is close to 3 percent right now, he pointed out. Bond yields move inversely to prices.

“One of these days, and hopefully soon, that difference has got to be narrowed,” he said. “In the meantime, there’s some volatility as the bund does better based upon weakness in Italy … or as Treasury [yields] go up based on upon a Fed decision.”

Meanwhile, Gross’ bond fund posted $300 million in withdrawals in the month of May, data from research service Morningstar showed Tuesday.

The fund had assets of $2.1 billion at the end of April.

“Investing requires patience,” Gross said. “This is a trade that will work out.”

— CNBC’s Tae Kim and Reuters contributed to this report.

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