Pacific Investment Management Co.’s Bill Gross said investors should embrace a defensive strategy because of the limits of zero-bound interest rates and systemic debt risk in global financial markets.

Emphasize income, de-emphasize derivate structures that are fully valued and be willing to accept returns lower than historical averages, Gross wrote in a commentary posted on Newport Beach, California-based Pimco’s website.

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 and raised his portion of mortgage securities to 50 percent, the highest since June 2009.

Editor's Note: Wall Street Insider Exposes Death of Main Street America

Treasurys with maturities from five to seven years have been the focus of purchases with longer-term debt unattractive due to risk of a pick-up in inflation, Gross said in an interview Feb. 3 on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. The Fund increased its allocation of Treasury Inflation Protected Securities, or TIPS, to 8 percent, Gross said that day.

Pimco, a unit of the Munich-based insurer Allianz SE, managed $1.36 trillion of assets as of Dec. 31.

Editor's Note: Wall Street Insider Exposes Death of Main Street America