Gross, whose Pimco Total Return Fund has $232
billion in assets, said the future "neutral" fed funds rate
would be critical for finding value in all assets, and that his
firm believed it was about 2 percent.
"At PIMCO, we believe that this focus on the future 'neutral'
policy rate is the critical key to unlocking value in all asset
markets," Gross said in his monthly letter to investors titled,
Gross, co-founder and chief investment officer at Pimco, said
that if the neutral rate is 2 percent, asset markets are "not
bubbly, just low returning." Bonds would be "attractively
priced" rather than "artificially priced" if the rate was at 2
percent, he said.
Financial bubbles are created when investors do not recognize
when rising asset prices get detached from underlying
Gross said his firm differed from current Federal Reserve
"participants" who believe the neutral rate is at 4 percent.
Pacific Investment Management Co, a unit of European financial
services company Allianz SE, had $1.94 trillion in assets as of
March 31, according to the firm's website.
(Reporting by Sam Forgione; editing by Chizu Nomiyama and
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