PIMCO Total Return ETF (NYSEArca: TRXT) manager Bill Gross in his latest investment outlook said investors need to take steps to position for a delevering world, including owning real as opposed to financial assets and reducing interest-rate exposure.
“In such a mildly reflating world, unless you want to earn an inflation-adjusted return of minus 2%-3% as offered by Treasury bills, then you must take risk in some form,” Gross wrote.
“We favor high quality, shorter duration and inflation-protected bonds; dividend paying stocks with a preference for developing over developed markets; and inflation-sensitive, supply-constrained commodity products,” he added.
TRXT has already gathered $256.2 in assets in less than a month of trading. [Gross Says PIMCO ETF Not Afraid of Copycats]
Gross has been warning investors about the risks of owning Treasuries, which have taken a hit recently on rising yields. He said if investors want to own long Treasuries, buy them in TIPS form – Treasury Inflation Protected Securities. Gross said 2-3% inflation is “a minimum in future years.” In February, Gross cut Treasury holdings in Total Return Fund, and raised the fund’s position in mortgages. [TIPS ETFs and Negative Yields]