Pacific Investment Management Co.’s Bill Gross increased his holdings of Treasuries to the highest level since July 2010, while billionaire investor Warren Buffett called them “dangerous.”
Gross boosted the proportion of U.S. government and Treasury debt in Pimco’s $250.5 billion Total Return Fund in January to 38 percent from 30 percent in December, according to a report on the company’s website Thursday. The purchases come a year after he banished U.S. government debt from the world’s biggest bond fund.
Buffett, the chairman of Berkshire Hathaway Inc., said low interest rates and inflation should dissuade investors from buying bonds.
“They are among the most dangerous of assets,” Buffett said in an adaptation of his annual letter to shareholders that appeared Thursday on Fortune magazine’s website. “Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal.”
U.S. 10-year notes yielded 2.04 percent Thursday in New York, rising from the record low of 1.67 percent set Sept. 23.
The difference between 10-year rates and the annual increase in consumer costs, known as the real yield, was negative 0.96 percent. The shortfall was as much as negative 2.14 percent in October, which was the most since 1980.
Laurence D. Fink, chief executive officer of BlackRock Inc., the world’s largest money manager, said that investors should have 100 percent of their holdings in equities because the lowest share valuations in at least 20 years mean they offer higher returns than bonds, speaking in a Wednesday interview with Bloomberg Television.
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