Difficult to generate much return, argues Bill Gross

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Bill Gross, co-founder and co-CIO of PIMCO, has just produced the new edition of his monthly Investment Outlook newsletter, again dealing with slow growth and sub-par returns.

Here is a summary:

  • Once interest rates inch close to zero and discounted future cash flows are elevated in price, it’s difficult to generate much more return if economic growth doesn’t follow.
  • Equity markets should be dominated by dividend yields and the return of capital via share buybacks, as opposed to growth.
  • In fixed income assets, we suggest that portfolios should avoid longer dated issues where inflation premiums dominate performance.

Click here for the full article.

Sources: Bill Gross, PIMCO – Investment Outlook, October 2011.

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