Capital ultimately backs capital. While politicians might make the headlines, it’s the bond markets that keep the score – and governments forgetting this cast-iron rule ultimately pay the price.
With US President Donald Trump overturning the 80-year world order, it has never been more imperative for Australia – including financial institutions – to nurture a better understanding of the Middle Kingdom.
Kumar to oversee Janus-Henderson bonds… and Bill Gross (maybe)
(pictured: Kumar Palghat)
Kumar Palghat, the co-founder and head portfolio manager of Australian-based bond manager Kapstream, will become the head of global fixed income at the merged US$320 billion Janus Henderson Global Investors. Theoretically, at least, he will be Bill Gross’s boss.
The proposed merger of Henderson Group and Janus Capital Group, announced early last week, was universally well received by the markets (they are both listed companies) and clients alike.
Both geographically and in terms of product offerings and styles of investment strategies, the two companies are very complementary. Australian clients and shareholders are going to do particularly well out of the deal, including Kapstream.
Palghat, a former head of Australian fixed income for PIMCO, and partner Nick Maroutsos formed Kapstream in 2006, when then Chief Executive of Challenger Funds Management, Rob Adams, lured them away to form a new boutique. Adams is now head of Janus Henderson Asia Pacific. What goes around comes around.
Adams said last week that it was great to be re-united with Kumar and his team under the new Henderson and Janus arrangement. Janus bought Challenger’s 51 per cent of Kapstream last year. The firm had already hired Bill Gross, the famous PIMCO founder, in 2014. Kumar would be playing an increasingly important role in the new, merged, business, Adams said.
As is well known, Gross is involved in litigation with PIMCO over alleged unpaid bonuses and other issues. Palghat is the fall-back person on Gross’s absolute returns bond fund.
Putting Gross aside, Kapstream has been, arguably, the most successful Australian fixed income manager over the past 10 years. Palghat says, however, that Kapstream tends to be more global in its outlook than other Australian bond managers.
The in-house Henderson bond management team, for instance, is a traditional duration-bet Aussie bond manager, with whom Phil Apel runs the absolute returns strategy. The two bond teams will be kept separate under the new proposed arrangement, Palghat said, at least for the time being. The future of fixed interest investing is very different than it was in the past. Kapstream gets it better than most.
Palghat said last week that the traditional way of managing fixed income was “no longer valid”. At Kapstream, he said, the manager sought out all ways to add value through the fixed income spectrum around the world. With the addition of Janus’s capabilities, and its famous portfolio manager Bill Gross, all the pieces were now in place, he said.
On the Gross question, he noted that Bill would be reporting directly to his CEO, Dick Weil, who is joint CEO of the combined company with Henderson’s Andrew Formica. That’s to the extent that Gross, one of the industry’s wealthiest men, reports to anyone.
Palghat will continue to live in Australia, although he will be travelling a lot more, overseeing the teams in Janus’s head office of Denver, Henderson’s big office in London, and Sydney. He already runs about US$30 billion of Australian and US-sourced fixed income money from Sydney, with nine people locally and six in Denver. He wants to maintain separate fixed income teams in those cities, including the separate Henderson team in Sydney. After the merger, he will oversee about US$90 billion, including the Asian and European funds.
