Tags: Gross | Gundlach | TIPS | fund

Barron's: Bond Gurus Bill Gross and Jeffrey Gundlach Are Taking Opposing Paths

By    |   Tuesday, 16 December 2014 12:51 PM

Two of the biggest names in bond investing — Bill Gross and Jeffrey Gundlach — are taking two very different views on a popular bond instrument investors use to bet on inflation trends, namely Treasury inflation-protected securities (TIPS).

Gross, the former Pimco chief and current Janus fund manager, endorsed TIPs in an appearance on CNBC this week, saying, "I think that TIPS look great," Barron's reported.

However, rival bond guru Jeffrey Gundlach of DoubleLine Capital said during a recent webcast, "There just isn't any reason to own TIPS at all. TIPS are facing a huge headwind. . . . TIPS are for losers for the time being."

Gundlach is a reliable critic of TIPS and questions their true performance. TIPS are essentially Treasury bonds with principal values that rise and fall along with inflation readings.

TIPS performed poorly in 2013 and have not delivered standout results in 2014. The iShares TIPS Bond exchange-traded fund is up 2.26 percent so far this year, but is still down 7.84 percent in the past two years.

TIPS are a bet that inflation will rise, but that Gundlach sees no evidence of inflation.

The disagreement over TIPS is not the only area where Gundlach and Gross differ.

"Earlier this month, Bill Gross wrote on Twitter that Treasury bonds might be overpriced. Jeff Gundlach had said just a week earlier that Treasuries still looked cheap," Business Insider www.businessinsider.com/bill-gross-tips-look-great-2014-12 noted. "Gross and Gundlach met about potentially joining forces as Gross got prepared to leave Pimco, which he left for Janus back in September, and maybe it's for the best they didn't."

It's far too early to make a judgment about the performance of Gross' new Janus Global Unconstrained Bond Fund versus his former flagship, the Pimco Total Return Fund — except so far for the initial 11 weeks, Pimco still comes out on top, The Wall Street Journal reported.

"His new Janus fund, which had only about $12 million in assets when he arrived, has returned a negative 1.10 percent, according to investment research firm Morningstar. Meanwhile, Pimco Total Return has gained 1.13 percent," The Journal said.

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Two of the biggest names in bond investing — Bill Gross and Jeffrey Gundlach — are taking two very different views on a popular bond instrument investors use to bet on inflation trends, namely Treasury inflation-protected securities (TIPS).
Gross, Gundlach, TIPS, fund
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2014-51-16
Tuesday, 16 December 2014 12:51 PM
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