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Friday, September 21, 2012

"Are These People Crazy?" Wonders Gross

News summary by MFWire's editors

The reports have come in from Bill Gross' keynote speech yesterday at the IndexUniverse Inside Fixed Income conference in Newport Beach.

The report from IndexUniverse leads with the Pimco [profile] boss' comments on competing fixed income ETFs. He dumped on the Vanguard Total Bond Market ETF (BND) and the iShares Barclays Aggregate Bond Fund (AGG), which he said that he and his team watch "obsessively."

When he sees the approximately $30 billion that has flowed into these funds, Gross said he asks himself, "Are these people crazy? Where is this $30 billion and why isn't it immediately being transferred into BOND?"

"If you have clients in BND or AGG, get them over [to Pimco's Total Return ETF]," Gross told theaudience. "I don't care about the fees. Just bring them over because you'll be helping them out. I can't guarantee it but I think it's a pretty good bet."

Meanwhile, the Reuters report focuses on the Pimco chief's macro outlook.

Yesterday we learned that Total Return Fund has gotten a boost from Ben Bernanke's plan to buy up $40 billion in government-backed debt. At yesterday's conference, Gross expects the Fed's QE program to continue until unemployment drops back around 6 percent.

The Reuters report also notes that Pimco Total Return Fund cut its exposure to Treasuries by a third last month.

According to the IndexUniverse story, Gross said that his advantage, compared to the Vanguard and BlackRock funds, is that he doesn't have to hold 40 percent Treasuries, like the index-based ETFs do.  

Edited by: Chris Cumming

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