The outperformance of the BOND ETF is largely attributed to the lack of legacy positions, and the ETF has been more flexible in its asset allocation.
Looking ahead, Gross believes the ETF will able to navigate a rising rate environment as he would invest in more foreign bonds and buy Treasury inflation-protected securities. [PIMCO Total Return ETF Manager Gross Trims Mortgages, Treasuries]
“There wouldn’t necessarily be a bear market everywhere,” Gross added.
Additionally, Gross warns that investors should not expect strong price gains as long-term interest rates remain low.
“And that doesn’t mean a bear market,” Gross said. “That just means returns are much lower than bond investors are used to.”
For more information on fixed-income assets, visit our bond ETFs category.
Max Chen contributed to this article.