According to CNBC.com, the world’s largest bond manager, Bill Gross of PIMCO, is shifting toward equities.
Global bonds guru Bill Gross, chief investment officer of Pimco, told CNBC Wednesday that he is making a shift towards equities.
“We are making a move into equities, period,” said Gross.
His rationale was somewhat surprising, but gives some insight into what he thinks of most sovereign credits these days:
“Corporate equities, in terms of valuation, are selling at very low P/E ratios and in some cases might be perceived to be almost as safe, or almost as secure as the sovereigns themselves,” said Gross.
When even the bond guys aren’t excited about owning bonds, you’ve got to scratch your head. Retail investors, on the other hand, are still piling money into bonds like crazy, I suspect in an effort to reduce their portfolio volatility. There might be more productive ways to accomplish the same task without taking on the risk of buying bonds at incredibly low yields. For example, a global allocation fund (like DWAFX or DWTFX) will typically have less volatility than most of the individual asset classes such as commodities or equities, but won’t necessarily lock you into a bond position. The volatility will clearly be higher than an all-bond portfolio, but the returns over time are likely to be higher as well.
For information about the Arrow DWA Tactical Fund (DWTFX) & Arrow DWA Balanced Fund (DWAFX), click here.
Click here and here for disclosures. Past performance is no guarantee of future returns.
