Bill Gross Turns More Bullish
Kurt Brouwer August 23rd, 2007
In an interview on Tuesday that was published in BusinessWeek magazine yesterday, Bill Gross came across as pretty positive and even a bit bullish [emphasis added]:
‘…For Bill Gross, manager of the world’s largest bond fund, it may be time to shift soon to a “more risk-taking posture” in the fund he oversees, even as markets remain beset by uncertainties.
Gross, who manages the $102 billion PIMCO Total Return Fund, told Dow Jones Newswires in an interview Tuesday that it’s uncertain whether financial markets are yet “out of the woods.” Still, given the dramatic sell-off in the credit markets, he plans to look for bargains there over the next three months. PIMCO is a unit of German insurer Allianz SE.
That’s a shift in strategy that reflects Gross’ belief in the strength of the domestic and global economies, as well as his view — in contrast to others in the bond markets — that efforts by the Federal Reserve and the Treasury to calm jittery investors are starting to show results…
As we saw in the previous post, ‘Buy When the Bonds Are Flooding the Street,’ a few of the mutual funds we like are snapping up bargains. We’re happy Bill Gross is thinking that way too. In the interview, he predicted a large drop in the Fed funds rate and he made some clear references to what he will be doing with Pimco Total Return over the next few months:
‘…”I think the global economy is sufficiently strong and the U.S. economy probably will avoid a recession, certainly on the corporate side, such that it’s probably time to move into some high-yield, time to move into investment-grade corporates … all of that has been hurt here in the last few weeks as hedge funds have been imploding and credit itself has widened dramatically in spread,” he says…
…”The objective of the total return fund over the next three months — because who knows how long it will take to sort itself out — but over the next three months, is to gradually assume a more risk-taking posture in the portfolio,” he said…’
That’s a pretty solid endorsement from Bill Gross that we are either at or close to a turning point in the subprime lending mess and the credit crunch that has followed on its heels. However, he is much less positive about the state of the housing market. More on that in an upcoming post.
Hat tip: Paul Kedrosky
- Investing , Mutual Funds
- Comments(1)
Did you enjoy this article?
but then why is he asking Bush to bail out the bag holders himself included?
http://money.cnn.com/2007/08/23/news/newsmakers/gross_homeowners/index.htm?postversion=2007082312
BTW, why is he asking Bush? not Fed or Treasure? I hope our politicians will let the pros do their job.