Gross: Don't Be Afraid of Inflation

VIDEO: Although PIMCO does expect inflationary pressures going forward, higher yields should help bond investors mitigate the pain of falling prices

Eric Jacobson 20 April, 2011 | 4:52PM
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In last part of an interviews PIMCO’s acclaimed and widely cited fund manager Bill Gross gave to Morningstar, Gross shares his outlook for bond market opportunities in an environment of high inflation and rising interest rates. Bill Gross spoke to Morningstar’s Director of Fixed Income Research Eric Jacobson shortly before S&P downgraded its rating for US sovereign debt. See Part I: Treasuries’ Risk-Reward Balance Is Off and Part II: Better Sovereign Debt Opportunities Outside US, Part III: Bond Investors' Menus Need to Expand and Part IV: Bond Funds Need to Beat Inflation.

Eric Jacobson: Let me ask you one last question and take it from the point of view of the very, very fearful investor, which we know there are a many out there right now, who are just really, really petrified about the prospect of rising rates.

Perhaps for as many reason reasons as just the press and the conventional wisdom that's out there, that perhaps those people don't know exactly where you and lot of the other folks in the institutional market stand, help them understand what you think is a reasonable expectation for what the dangers are for the next few years and what it would mean to own a fund like Total Return in that environment?

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Eric Jacobson  is director of fixed-income research with Morningstar.

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