Investors need to accept a new normal based on lower rates of economic growth, according to the managing director and chief investment officer of Pimco, Bill Gross.
In an address to the PortfolioConstruction conference starting in Sydney today, Gross said the new normal was an economy that grew much more slowly when it did actually grow, and which offered much lower asset returns as a result.
He said this gave rise to the need for investors to ‘shock proof’ their portfolios because low returns were being combined with increased risk.
Gross said that while the 10 to 12 per cent returns recorded by Pimco’s bond funds over the past two years were unlikely to be repeated this year, he still expected a solid positive performance
“Its not the same double-digit type of world but nonetheless an attractive world compared to very low inflation going forward,” he said.
