Vol. 17, No. 3, 2019
Aaron Brown and Richard Dewey
The main practical application of this paper is advancing understanding of how to evaluate portfolio managers, and speciﬁcally how the concept of “alpha” differs in ﬁxed income versus equities. The paper also explores market efﬁciency and sources of excess returns in ﬁxed income investing. Finally, the paper takes a deep dive decomposing the returns of “Bond King” Bill Gross’ PIMCO Total Return fund, and compares his career to that of the “Oracle of Omaha” Warren Buffett. In addition to some historical interest, this opens a window on how “superstar” investors achieve their exceptional track records.