This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Pimco's Gross Has a New Rival: Pimco

Stocks in this article: PTTDX PUBAX ATMAX

NEWPORT BEACH, Calif. ( TheStreet) -- Can any bond fund beat Bill Gross's Pimco Total Return (PTTDX), which hasn't declined in a decade?

Yes, the U.S. bond giant says: Pimco's own Unconstrained Bond (PUBAX) fund. While Unconstrained Bond comes with some extra risk, it should outperform the $186 billion Total Return over the long term, Pimco contends.

As its name suggests, Unconstrained Bond has considerable freedom to invest anywhere in the world. In contrast, Gross has stricter limits on how he manages his fund.

By charter, Gross must track the Barclays Capital aggregate bond index, placing only limited bets on the direction of interest rates. Unconstrained Bond isn't tied to any benchmark. Under extreme circumstances, the young fund can short the bond market, betting that bonds will fall as interest rates rise. While Pimco Total Return can only put up to 10% of its assets in junk bonds, Unconstrained Bond can put up to 40%.

Plenty of people are intrigued by the more aggressive approach. They have already invested $2.5 billion in the young fund. What has attracted much of the interest is Pimco's reputation for making shrewd market calls. In letters to shareholders and interviews with reporters, Gross and other Pimco managers present their outlook for the markets. They invest according to that view, and most often they have been right.

When banks suffered huge loan defaults in the early 1990s, Gross decided that the problems weren't as serious as many investors believed. He bought bonds from Citicorp, the precursor to Citigroup (C - Get Report), riding them to huge gains. Gross scored another coup in the 1990s by buying emerging-market bonds that had been crushed when Asian markets melted down.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs