Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, expects stocks and bonds to return less than 5 percent in 2013 as high unemployment persists, he wrote in a Twitter post.
Gross’s message reaffirms what he wrote this month in his December investment outlook, which said “structural headwinds” may lower real economic growth below 2 percent in the U.S. and other developed nations. The Standard & Poor’s 500 Index has gained 14 percent this year including reinvested dividends. The Bank of America Merrill Lynch U.S. Corporate and Government Index is up 5.2 percent in 2012, and gold has risen 4.8 percent.
Newport Beach, California-based Gross wrote today in the post: “2013 Fearless Forecasts: 1) Stocks & bonds return less than 5%. 2) Unemployment stays at 7.5% or higher 3) Gold goes up.”
U.S. bond markets are scheduled to close early tomorrow and remain shut on Jan. 1 for the New Year’s Day holiday. Stock trading in New York will be closed on Jan. 1.
With globalization, technological and demographic changes restricting growth, investors should seek returns from commodities such as oil and gold, U.S. inflation-protected bonds, high-quality municipal debt and non-dollar emerging market stocks, Gross wrote in his outlook article on Dec. 4, reiterating earlier recommendations.
“While there are growth potions that undoubtedly can reduce the fever, there may be no miracle policy drugs this time around to provide the inevitable cures of prior decades,” Gross wrote in the article, posted on Pimco’s website. “These structural headwinds cannot just be wished away.”
The firm’s Total Return Fund has gained 10.4 percent this year, ranking in the 95th percentile among its peers, according to data compiled by Bloomberg.
Pimco, a unit of the Munich-based insurer Allianz SE, managed $1.92 trillion as of Sept. 30.