U.S. Markets open in 8 hrs 5 mins

PIMCO’s Gross Favors Shorter Duration, Inflation-Protected Bonds

tlydon@globaltrend.com (Tom Lydon)

PIMCO Total Return ETF (NYSEArca: TRXT ) manager Bill Gross in his latest investment outlook said investors need to take steps to position for a delevering world, including owning real as opposed to financial assets and reducing interest-rate exposure.

“In such a mildly reflating world, unless you want to earn an inflation-adjusted return of minus 2%-3% as offered by Treasury bills, then you must take risk in some form,” Gross wrote.

“We favor high quality, shorter duration and inflation-protected bonds; dividend paying stocks with a preference for developing over developed markets; and inflation-sensitive, supply-constrained commodity products,” he added.

TRXT has already gathered $256.2 in assets in less than a month of trading. [Gross Says PIMCO ETF Not Afraid of Copycats]

Gross has been warning investors about the risks of owning Treasuries, which have taken a hit recently on rising yields. He said if investors want to own long Treasuries, buy them in TIPS form – Treasury Inflation Protected Securities. Gross said 2-3% inflation is “a minimum in future years.” In February, Gross cut Treasury holdings in Total Return Fund, and raised the fund’s position in mortgages. [TIPS ETFs and Negative Yields]

Over the weekend, Gross on Twitter said the Federal Reserve would likely hint at further quantitative easing at its April meeting.

On March 12, Gross said the U.S. central bank “must keep buying bonds that the market doesn’t want,” Reuters reported.

PIMCO Total Return ETF