Mar

12

 Concerning Gross Vs. Van Hoisington, don't listen to what they say. Listen to what they do. Or more precisely, how they've done for their customers during bull and bear bond markets:

Hoisington has one public bond mutual fund which is named the Hoisington US Treasury Fund (and he has the discretion to move his duration from 0 to 25+ years) but only owns US Treasuries. His performance is shown here.

His 1year/5year/10year returns are: 4.42%/4.77%/6.31% versus the Lehman Agg Index of 4.93/5.8/5.61. .

Pimco's Total Return Fund
can invest in all sorts of fixed income, but they keep their duration at 4.30 years +/- 2 years. Gross' 1year/5year/10year return are 7.31%/8.12%/7.16%

So — Gross has outperformed VH substantially over the past 1 and 5 years. And over the past ten years, Gross outperformed VH by about 85 basis points/year. Most importantly, Hoisington LOST 22.6% in 2009 while Gross made 13.8% in 2009. Which superficially makes Hoisington look like a one-trick bull-market pony….

George Zachar writes: 

There's an apples-oranges element to this analysis. VH has only one risk parameter to play: treasury duration. Gross can play that AND sector/credit rich/cheap. The ability to play in spread product is easily worth dozens of bp in annual performance pickup.

Both men are arguably brilliant…but they do different things with different toolkits.

 


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