since Gross doesn't have much confidence in U.s treasuries and seemed to have gone short. what will he be doing for his flagship fund (pttrx), which I have quite a lot of money invested into it, to make a profit. He has about a third of the funds money in cash,. Is he using this funds money to buy into foreign markets, I just don't quite understand his plan for now. what kind of returns should we expect if he is right on about our treasuries. the next three year return, will we possibly see a 4% 6% or even a 12% return on our investments? any insight will be helpful, thanks.
Clearly what you don't understand is that you can make money on bonds whether they rise or fall if you are smart enough to advantage your cash positions in front of moves up or down. The fact that Gross has stated that the RATE bonds earn have seen thier better days is very likely a fact.
HOWEVER, this does not mean that a bond fund can't make money in this environment. You have a myopic view that is focused only on higher rates of return as the only way in which this fund can make money which is simply not true. Not in love with PTTRX but is has carried the day for the last 3 1/2 years and in the last 2 weeks.
You are obviously in love with PIMCO and I was too.
What you need to understand is that bonds have seen it's best days and Gross himself commented on the subject many times.
Presently there is a dangerous road for bonds along with stocks.
If you compare yields on stable value and bond funds then you will see that they are very close but risk / rewards ratio is a huge difference there.
Good luck to all....
Go here and click on the blue box that says Pimcos Funds Portfolio, you can also use the performance calculator to see how it has performed YTD, monthly, whatever you select.
I don't think you thoroughly understand the bond problem. Your CD's are less securitized than the securities in the PTTRX portfolio - this is one reason I got out of a stable income fund and transferred into PTTRX.
Somehow the statement that PTTRX is an intermediate bond fund has been miscontrued by many to equate solely to US Treasuries.
PTTRX can on occasion be invested in other securites. In fact it can be on the other side of the trade if the fund mgr. decides it is in the best interest of the fund to do so. Don't forget there is a lot of money to be made by a bond fund even when the general trend for interest rates are low or falling. This is one way PTTRX can make short term cap gains as they have done for the last two years.
More than likely, he is sitting on the cash waiting for US rates to go up and then begin to buy again. There is absolutely no reason to buy US treasuries here. None. Who wants to put that kind of money out there for no return.
I would rather make no gains, than to lose. Gross has some foreign instruments that are paying a decent rate, so I wouldn't worry too much. Rather have my 401k in PTR fund than in over bloated stocks that are dying to crash into the abyss. Rates will begin to move up once the FED Reserve spends their last $45-$50 billion this month. Then I guarantee you they go up quickly....No one is going to buy treasuries at these paltry rates. I have money sitting in Treasury Direct doing nothing, because there is need to risk $1000 for a bond to get 10 cents interest on it in a year. Screw that. Follow Gross.
Gross make it clear, bond market has seen it best days but no more for a while.
“We’ve always wondered who will buy Treasuries” after the Federal Reserve ends its $600 billion programmed purchases of government bonds after this month, Gross said.
“It’s certainly not Pimco and it’s probably not the bond funds of the world,” he added.
As for the increasing rates to make Treasuries attractive, FED cannot do anything about that now.
It will be a financial suicide to increase rates when markets and our economy in it the current state.
Financial system needs to go through unraveling on it's own without money printing solution.
QE3 will not happen......
Billy Bob Gross has his pecker in the grinder. He bought a $23 million tear-down in Newport Beach, CA and is building a mansion. Meanwhile, you're taking it up the alimentary canal on his treasury short position. Enjoy.