Globe and Mail Update Published on Thursday, Aug. 12, 2010 6:06AM EDT Last updated on Friday, Aug. 13, 2010 7:39PM EDT
And until it comes up with some new solutions, Bill Gross says, his investment eyes will continue to wander to greener pastures – including Canada.
“We’re much more in awe of countries such as Canada, with a decently balanced budget, and with low debt-to-GDP, and with financial institutions that have been solvent and sound and conservative in their lending, and that have something to export,” said Mr. Gross, founder and co-chief investment officer of Pacific Investment Management Co. LLC (commonly known as PIMCO), which oversees more than $1.1-trillion (U.S.) in investment assets, primarily in the bond markets.
“North of the border has become, while not our favourite destination, certainly a preferable destination to what we see in the United States.”
Mr. Gross declined to say whether his bearish views are translating into a reduction in PIMCO’s exposure to U.S. government bonds – indeed, as recently as June his funds’ holdings of Treasuries were on the rise and at eight-month highs. However, he has been raising his exposure in Canadian and Brazilian government bonds, and his favoured investment strategies right now are outside the U.S. market.
“Investors, whether it’s equity or bonds, should be oriented toward growth and stability, and, yes, a political foundation that promotes both.
“I’ve mentioned Brazil, and, yes, Canada’s a good place. Even Mexico has better initial conditions in terms of low debt than the United, States, but admittedly the stability issues and politics are a question. But in general, the developing world is in much better position than the developed world, so that’s where dollars should go.”