Investors should avoid dollar-denominated government debt weighed down by budget deficits and invest in bonds in Canada, Mexico and Brazil, according to Bill Gross, manager of the world’s largest bond fund at Pacific Investment Management Co.

“It’s a critical strategy going forward to get out of the dollar and into some currency that holds its value,” Newport Beach, California-based Gross said in an interview with Tom Keene on a Bloomberg Television “Surveillance Midday” program that was taped on Dec. 22 and broadcast today for the first time. “I’d suggest Mexico, Brazil or Canada as three examples of countries with good fiscal balance sheets.”

The U.S. deficit was $150.4 billion last month, exceeding the median estimate of economists surveyed by Bloomberg News, compared with $120.3 billion in November 2009, according to a Treasury Department budget statement released in Washington.

The extension of tax cuts that President Barack Obama signed into law will expand the federal budget deficit to $1.34 trillion for fiscal 2011, Credit Suisse Group AG strategists estimated on Dec. 7. Obama announced a day earlier an agreement with congressional Republicans to extend tax cuts enacted under his predecessor, George W. Bush.

Gross said in his November investment outlook that additional asset purchases by the Federal Reserve will likely signify the end of the 30-year bull market in bonds. Gross published the comments before $600 billion in new asset purchases were announced by the central bank Nov. 3.

The $250.2 billion Total Return Fund, also the world’s biggest mutual fund, has handed investors a gain of about 8.4 percent this year, beating about 75 percent of its peers, according to data compiled by Bloomberg.

U.S. Treasury and agency debt returned 5.3 percent in 2010, after falling 2.6 percent in the previous year, according to a Bank of America Merrill Lynch index. The Standard & Poor’s 500 Index has rallied 13 percent.