Bill Gross, co-chief investment officer at Newport Beach-based Pacific Investment Management Co., elaborated Friday on his recent move to sell all U.S. bonds from his $236.9 billion Pimco Total Return fund, the world’s largest mutual fund.
“It is a question of valuation,” Gross said on Bloomberg Television Friday. “It is not a question of departing treasuries based on credit fears.”
The U.S. government is set to maintain its “AAA” credit rating for years, according to Gross.
His recent selloff “is simply a reflection of the value of Treasuries relative to other sovereigns or corporate bonds or other issues in the marketplace,” Gross said.
Gross—dubbed the king of bonds—recently warned about U.S. deficit spending and the potential for inflation, which drag down the value of government debt and require issuers to pay bigger returns to investors.
His recent bond selloff is the strongest signal yet that Pimco believes the bond rally of the past 30 years has run its course.
The move comes as the investment manager stages a push into stocks.
Pimco, which manages $1.2 trillion in investments for pension funds, insurers, corporations and others, started its first stock fund, the Pathfinder, a year ago. The fund now has $1.8 billion in investments.
The company plans to debut its second stock fund, with a focus on emerging markets, this year with more expected in coming years.
Gross also touched on the massive earthquake in Japan and said it doesn’t change his outlook about the global economy.
“It changes our view on Japan to some extent,” he said. “Japan has a very high level of debt to GDP and this will exacerbate the problem. We’re not sure how much.”
