Bill Gross’Alpha: The King Versus the Oracle

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.