Thursday, August 8, 2013
Bill Gross – August 2013 Investment Outlook: Bond Wars
Bond Wars Speed Read
1) Bond managers must adapt to a new world of near zero bound interest rates and the likelihood of lower total returns.
2) Reducing maturity is not the only potential strategy to win this new war; in fact because of near 0% money market yields, at times it may be counterproductive.
3) By focusing on “carry” and its diversifying characteristic components, a bond manager can help protect downside risks.
4) Carry consists of maturity extension, credit spreads, yield curve differences, volatility, and currency components.
5) Stick with PIMCO, we’re going to win this new war!