Bill Gross: What’s His Outlook for 2013?

Bill Gross is the manager of Pimco’s Total Return Instl (MUTF:PTTRX), and was named Morningstar’s Fixed Income Fund Manager of the Decade in 2010. On CNBC earlier today, Gross discussed his economic outlook for 2013. Originally the result of two tweets via the Pimco Twitter account, the fund manager mentioned that “stocks in 2013 depend on two primary things […] one: real economic growth, which we see at 2% or less, and second of all, the Fed […] Ben Bernanke isn’t Rumpelstiltskin,” adding that “he can only spin straw into gold for so long.”

The tweets, which outline Gross’s specific forecasts, can be seen below:

Regarding point No. 1, Gross mentioned that “wages probably will not continue at such a low rate […] in terms of the global economy, we’re going to see growth in the 4% category as opposed to 5 or 6 [%].”

It also must be said that while general equity indices have returned a bit more than Gross foresaw at the start of 2012, his Total Return Fund is still up over 10% year-to-date, albeit at three-year average beta of 0.74 (according to Morningstar).

What’s the fund manager’s outlook for gold?

Obviously, Gross’s general bullishness on gold is a result of the Fed’s continuous monetary easing, but it’s worth noting that he doesn’t have a specific target. On the subject, he had this to say:

“We think gold will move higher, as well commodities; it’s hard to say exactly how much. Gold, to my way of thinking, is a function of real interest rates. To the extent that real interest rates have continued low […] ultimately it’s an asset that depends on inflation, to the extent that the Fed and other central banks can re-flate the economy […] a 10-20% return from gold […] is a thing of the past as well.”

Even more interestingly, Gross admitted that, in his opinion, “all asset markets are in this period […] in which less than double-digit returns are going to be the order of the day.”

As CNBC’s John Melloy points out, Gross’s optimistic calls on “high-rated credit, municipals, Treasury Inflation-Protected Securities, and higher-yielding equities” all underperformed the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) this past year. We’d like to add, though, that most of the fund manager’s investment ideas typically sport lower volatility than the S&P.

Briefly mentioned on the last page, Gross’s Total Return Fund has a below-average beta in the past three (0.76), five (0.90), and ten (0.98) year periods.

Let us know your thoughts on the fund manager’s forecasts. For more coverage of these topics, continue reading below:

Inside Citi’s 2013 Agriculture Outlook

Is Gold’s 12-Year Run Over?

J.P. Morgan’s Best Ideas for 2013