Bond fund may cut risk profile
Pacific Investment Management Co.’ s Bill Gross, manager of the world’s biggest bond fund, said the investment company may reduce its risk profile in 2013 after posting higherthan-average returns this year.
With interest rates so low and corporate spreads so tight, “you have to be leery of prices going the other way,” Gross said Friday.
Newport Beach, Calif.based Pimco “might begin a shift toward something safer, and something more clean in terms of those dirty-shirt investments.”
Gross wrote in his monthly investment outlook that structural headwinds may reduce real economic growth below 2 per cent in the U.S. and other developed nations.
With globalization, technological and demographic changes restricting growth, investors should seek returns from commodities such as oil and gold, U.S. inflation-protected bonds, high-quality municipal debt and non-dollar emerging market stocks, he said.
Gross, who serves as co-chief investment officer with chief executive officer Mohamed El-Erian, said Pimco’s investment committee will meet today to discuss the outlook for 2013.
Long maturity developed country bonds in the U.S., U.K. and Germany should be avoided, as well as high-yield debt and financial stocks of banks and insurance companies, Gross wrote.