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"The days of getting rich quickly are over, and the days of getting rich slowly may be as well." Bill Gross

In his first "Investment Outlook" letter since the announced departure of his No. 2, Mohamed El-Erian, PIMCO's co-founder Bill Gross remained confident on his company's future and also shared his view on the US economy - in particular, the credit situation. The Coles Notes below:

  • 1) Asset prices depend on credit creation and expansion.
  • 2) The U.S. and other countries create less credit from the public standpoint as their deficits decline.
  • 3) 3–4% credit expansion in the U.S. may not be enough to maintain 3% growth, especially if asset prices go down and velocity is affected.
  • 4) Don’t be a pig in a highly levered global marketplace. There is risk out there.

The PIMCO Total Return Fund (PTTRX), the world's largest bond fund with $237bn AUM, saw $3.5bn in redemptions in January following a record net redemption of $41.1bn in 2013. Between El-Erian's decision to leave and the outflow of funds, PTTRX managed some good news by delivering a total return of 1.35% in January compared to a 1.92% loss in 2013, the fund's biggest drop since 1994.

In a separate interview with Bloomberg, Gross called China "the mystery meat of emerging markets". As tasty as that sounds, it looks like Gross is advising against the China play.