--Gross's fund has posted strong return this year
--Gross favors oil, gold, TIPS, emerging market stocks
--Gross dislikes long-dated Treasurys, bunds, gilts
The world's biggest bond fund, run by Bill Gross, enticed $2.55
billion in new cash in November, boosting the inflow for this year
to $17.1 billion.
The data, released by fund tracker Morningstar Inc. on
Wednesday, signals that the $285 billion Pimco Total Return Fund
(PTTRX) continues to draw new investments as Mr. Gross has churned
out a return that has more than twice that from the benchmark
index.
The fund has handed investors a return of 10.3% in 2012 through
Tuesday, beating the 4.43% of the Barclays U.S. Aggregate Bond
Index, according to data from Morningstar.
Over the past 10 years, the bond fund has returned 7%, compared
with the 5.4% return on the benchmark.
Mr. Gross is founder and co-chief investment officer at Pacific
Investment Management Co. Part of Allianz SE (ALIZF, ALV.XE), Pimco
is one of the world's biggest asset-management companies, with more
than $1.8 trillion in assets under management.
The inflow so far in 2012 was a strong rebound from an outflow
of $3.6 billion for the first 11 months of 2011 when Mr. Gross was
hit by soured bets on a selloff in Treasury bonds.
Still, the inflow was moderate compared to $29.3 billion for the
first 11 months of 2010 and $45.8 billion between January and
November of 2009.
Pimco's Total Return Fund benefited from Mr. Gross's heavy
holdings of high-quality U.S. mortgage-backed securities, which
account for about half of the fund.
Mr. Gross had bet the Federal Reserve would buy such bonds to
support the economy since earlier this year. The Fed did launch a
program to buy MBS in September.
In his December investment outlook released Tuesday, Mr. Gross
reiterates his warning in recent months that investors need to
adjust their mindset toward an era of much lower future annualized
returns from both bonds and stocks compared to the last
decades.
It is "harder to maintain the economic growth that investors
have become accustomed to," said Mr. Gross in the investment
outlook. "Investors should expect future annualized bond returns of
3-4% at best and equity returns only a few percentage higher."
Mr. Gross added that low return period may not last "forever"
but it will be "with us for a long, long time."
In the report, Mr. Gross laid out an investing theme based on
his persistent views that developed nations will have 2% or lower
inflation-adjusted economic growth for the foreseeable futures
while emerging markets would do better. Meanwhile, major central
banks' monetary stimulus to reflate the economy likely generate
inflation in the longer term, hurting the value of longer-dated
government debt.
Mr. Gross favors commodities like oil and gold, Treasury
inflation-protected securities whose value rises along with a gain
in consumer prices, high-quality municipal bonds and non-dollar
emerging-market stocks.
His dislike list includes long-dated government debt in the
U.S., U.K. and Germany; U.S. junk debt and stocks of banks and
insurance companies.
Write to Min Zeng at min.zeng@dowjones.com, or
min.zeng@wsj.com
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