Bill Gross' Janus Global Unconstrained Bond posts $11.7 million outflow in May

NEW YORK (Reuters) - The Janus Global Unconstrained Bond Fund, overseen by widely followed investor Bill Gross, posted net outflows of $11.7 million in May despite his "short of a lifetime" trade against German Bunds.

Morningstar said on Monday total assets in the Janus Global Unconstrained Bond Fund at the end of May stood at $1.5 billion, with more than $700 million of that from Gross's personal money.

On April 21, Gross said he placed a wager against German bonds, tweeting that German 10-year Bunds were "the short of a lifetime" and that the bet was better than the pound in 1993.

Gross was referring to investors George Soros and Stanley Druckenmiller, who made their names betting correctly against the pound in 1992.

Gross's investment appeared prescient, with prices on German Bunds falling and their yields rising. The yield on the 10-year Bund has risen to 0.89 percent on Monday from the latest low of of 0.049 percent touched on April 17.

"My famous (infamous?) 'Short of a lifetime' trade on the German Bund market was well timed but not necessarily well executed," Gross wrote in his June investment outlook report to clients. He did not elaborate on the execution of the transaction.

So far this year, the Janus Global Unconstrained Bond Fund, which Gross started managing in October, is posting returns of negative 0.63 percent. That's trailing 95 percent of its peer category and underperforming them by 1.93 percentage points, according to Morningstar as of June 5.

"Through May, the Janus fund declined in value this year, underperforming its peers and the Barclays Aggregate index," said Todd Rosenbluth, director of ETF & Mutual Fund Research at S&P Capital IQ. "Despite the strong brand name Bill Gross has with fixed-income investors, a fund with a short record that underperforms will face challenges gathering fresh assets."

Gross, who built Pimco into one of the largest investment firms in the world, resigned from the firm on Sept. 26 to join Janus Capital Group Inc.

Unconstrained bond funds had become some of the most popular investment vehicles over the last year because they have the flexibility to invest in all types of bond securities globally and often choose credit rather than interest-rate sensitive assets.

(Reporting By Jennifer Ablan; Editing by Alan Crosby and Jonathan Oatis)