Bill Gross Releases New Investment Outlook, ' They Just Wanna Sell You a Bond Fund'

BY PR Newswire | TREASURY | 05/02/24 10:00 AM EDT

LAGUNA BEACH, Calif., May 2, 2024 /PRNewswire/ -- Legendary bond and fixed income pioneer William H.?(Bill) Gross?today released a new Investment Outlook, "They Just Wanna Sell You a Bond Fund." In his latest Outlook, Mr. Gross declares that the "total return" bond fund concept he helped originate and popularize almost four decades ago, "is dead" and that he disagrees with "investment managers touting bullish forecasts for 4.60% 10-year Treasuries."

Photo credit: Mary Hurlbut/Stu News Laguna

By way of background, Mr. Gross writes: "This concept of 'total return' was a phrase Pimco originated in the depths of the bond bear market in the early 1980's. Such commonsensical brilliance emanated from a 15%, 30-year Treasury yield and the observation that based on rock bottom durations of 6-7 years they could go to 17.5% before an investor would be in the red. Not slam dunk at the time but close. Thus, managers were able to reverse the past reality of 'certificates of confiscation' for which they were known at the time and produce a 'total return' that was positive. Worked for a long time, until the summer of 2020 when 10-year yields bottomed at 53 basis points and these 'investments' came to resemble Sisyphus headed downhill ? 2 steps down, one step back up in price. Because yields were near 0%, not 15%, and durations were now in the 20+ year category, total return was dead."

Bottom line, writes Mr. Gross, "Total Return is dead. Don't let them sell you a bond fund."

Full text of?Bill Gross's?May 2, 2024, Investment Outlook can be found at his?website.

About?Bill Gross

Bill Gross?has been a pioneer in fixed income investing for more than 40 years. He co-founded PIMCO in 1971 and served as managing director and chief investment officer until joining Janus Henderson Investors in 2014. He retired in 2019 to focus on managing his personal assets and private charitable foundation. Throughout his career, he has received numerous awards, including Morningstar Fixed Income Manager of the Decade for 2000 to 2009 and Fixed Income Manager of the Year for 1998, 2000 and 2007. Mr. Gross became the first portfolio manager inducted into the Fixed Income Analysts Society's Hall of Fame in 1996 and received the Bond Market Association's Distinguished Service Award in 2000. In 2011, Institutional Investor magazine awarded him the Money Management Lifetime Achievement Award. Mr. Gross oversees the?$465 million-asset William, Jeff and Jennifer Gross Family Foundation, which annually donates up to?$21 million?to non-profits involved in humanitarian causes, health care, arts, and education. For more information or to view Investment Outlook archives, please visit? For information about Mr. Gross's philanthropic activities through the William, Jeff and Jennifer Gross Family Foundation, please visit? his new book "The King And I: 46 Years of Investment Outlooks, Musings, And 'Commonsensical' Thoughts From Bond King Bill Gross," and his prior book "I'm Still Standing: Bond King?Bill Gross?and the PIMCO Express" on

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.