Word: pimco
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...bonds, which are riskier than those issued by the government, yielded 4.71% last week. Brokerages like Charles Schwab offer both products. Or you can opt for the original inflation-protected securities, known as TIPS, issued by the U.S. Treasury, or mutual funds that invest in them, such as PIMCO Real Return Fund or Vanguard Inflation-Protected Securities. --By Barbara Kiviat
Americans struggling to find work, get a decent pay raise or buy a home must marvel at the peculiar worries of Bill Gross. A legendary investor, Gross runs the $76 billion Pimco Total Return bond fund. In recent weeks he has sold $6 billion in Treasury bonds, activity that has contributed to a sharp rise in mortgage interest rates. Gross, though, is more concerned about bad things that might happen in the future, not what's happening now. "Two or three years down the road," he says, "inflation might be a real pressure cooker...
There may be good news in all this. Much of the recent increase in interest rates has been technical--giant mortgage holders like Pimco, Fannie Mae, Freddie Mac, Chase and J.P. Morgan have been selling T-bonds in a complex strategy that helps to shield their vast mortgage holdings against risk. But despite signs of economic recovery, Gross believes bond yields will settle in at current levels--meaning mortgage rates will settle here as well. "We're done selling," Gross says. At least...
RETHINK SHORT-TERM SAVINGS. You pick up an extra point of yield switching from a money-market fund to a short-term bond fund. Best bet: a low-expense fund with securities that mature in two years, like Vanguard Short-Term Treasury and Pimco Low Duration. They carry only minimally more risk than a money-market fund...
...RETHINK SHORT-TERM SAVINGS. You pick up an extra point of yield switching from a money-market fund to a short-term bond fund. Best bet: a low-expense fund with securities that mature in two years, like Vanguard Short-Term Treasury and Pimco Low Duration. They carry only minimally more risk than a money-market fund...