Janus Doubles Down on Risky Bond Bet With Bill Gross Hire

Updated from 11:18 to include BlackRock and Legg Mason share price reaction and statement from Jefferies report.

NEW YORK (TheStreet) -- With Janus Capital's  (JNS) hire of "Bond King" Bill Gross, the longtime equity mutual fund manager has announced its goal to become a top global player in fixed income.

Janus' $29 billion fixed income portfolio is dwarfed by the holdings of PIMCO, one of the world's largest fixed income managers with over $2 trillion in assets.

The market clearly liked the move with Janus shares rising 33.4% to $14.83 in afternoon trading Friday.

Still, the hire comes at a risky time, with most observers expecting the Federal Reserve to begin raising interest rates mid-to-late next year, suggesting a multi-decade bull run for bonds may finally be coming to a close.

Also, Gross joins Janus with PIMCO, the firm he founded, under a cloud. Performance has struggled of late and a very public dispute between Gross and his one-time protege, former CEO Mohammed El-Erian, led to El-Erian's departure in January. PIMCO is also being investigated by the Securities and Exchange Commission over potentially inflating exchange traded fund performance, according to reports by The Wall Street Journal and Bloomberg, among others. An email to a PIMCO spokesman was not immediately returned.

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A Janus spokesman had no immediate response.

PIMCO's recent difficulties have clearly taken a toll on Gross, whose identity is closely tied to the firm he founded. Still, his impressive track record over several decades turned the so-called "Bond King" into the closest thing the bond industry has to a celebrity. And Gross's status only benefited from his reputation for sometimes eccentric public behavior.

What's more, flows into bond funds remain substantial. For three months ending in July U.S. taxable bond funds saw more inflows than any other fund category, according to a Morningstar report last month.

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