By Sam Forgione
NEW YORK, March 4 Pimco's Bill Gross, manager of
the world's largest bond fund, said Tuesday that risk assets
such as stocks and high-yield bonds will outperform this year if
the U.S. Federal Reserve and other central banks can convince
investors that easy money policies are stimulating growth.
"If global central bankers can convince investors that
their abnormal policies can recreate a semblance of the old
normal economy, then risk assets at the outer edges of our
circle will have higher future returns than otherwise," Gross
said in his monthly letter to investors, titled "The Second
Gross, co-founder and co-chief investment officer at Pimco,
said risk assets are "not necessarily mispriced" despite central
banks' easy money policies that have kept interest rates
Gross said the Fed - which has kept its benchmark short-term
borrowing rate, the Fed Funds rate, near zero since late 2008
and bought trillions of dollars in bonds to help stimulate the
economy - will need to sway investors that its recent push for
more "qualitative" guidance is effective.
Gross cited comments from St. Louis Fed President James
Bullard, who said in mid-February that he expected the Fed to
drop its economic thresholds and have to "make more qualitative
judgments" on when to tighten policy.
Gross cautioned investors to "longer-term consequences,"
however, and said that liquidity in corporate bonds will be
"challenged" as the Fed winds down its quantitative easing.
Gross's flagship Pimco Total Return Fund posted $1.6 billion
in outflows in February, reducing the fund's assets to $236
billion, according to data from Morningstar. That marked the
fund's 10th straight month of outflows. The fund posted a record
$41.1 billion in outflows last year.
The fund rose just 0.52 percent last month, trailing 71
percent of its peers, according to preliminary Morningstar data.
It also slightly trailed the 0.53 percent gain of the benchmark
Barclays U.S. Aggregate bond index.
The Pimco Total Return Exchange-Traded Fund, an
actively-managed ETF designed to mimic the strategy of the
flagship mutual fund, posted February outflows of $42.6 million.
That also marked the 10th straight month of withdrawals from the
ETF, which has roughly $3.5 billion in assets, according to
Investors pulled a total of $2.5 billion from Pimco's U.S.
open-end mutual funds in February, the ninth consecutive month
of outflows from the funds. While Pimco posted outflows,
DoubleLine and another competitor, Loomis Sayles, attracted
inflows last month, according to Morningstar data.
DoubleLine attracted $194 million in new cash across its
U.S. open-ended mutual funds last month, the firm's first
inflows in nine months. Los Angeles-based DoubleLine had over
$47 billion in assets as of Dec. 31, according to its website.
The DoubleLine Total Return Bond Fund, run by
Jeffrey Gundlach, attracted $210.5 million in new cash last
month, bringing fund assets to $31.4 billion.
Loomis Sayles, where closely-watched money manager Dan Fuss
serves as vice chairman, attracted a slight $80.4 million to its
U.S. open-end mutual funds in February. The firm had $199.8
billion in assets as of Dec. 31, according to its website.
Pacific Investment Management Co, a unit of European
financial services company Allianz SE, had $1.91
trillion in assets as of Dec. 31, according to its website.