The Best Way to Invest with “Bond King” Bill Gross

Because of all of these advantages, the early results for BOND have been great, with shares up 10% on the year. This is more than double the performance of its benchmark index, the Barclays US Aggregate Bond TR, which has been up just 4.4% in 2012.

That amazing performance was also driven by this ETF’s lower assets under management. Starting with a smaller base of $100 million under management in February enabled Gross to utilize strategies for which his $280 billion mutual fund is simply too big. But the Street has already noticed the ETF’s awesome performance, pushing BOND’s total assets under management to more than $3 billion in the short nine months the ETF has been around.

Risks to Consider: As you can see in the chart above, bonds have seen huge gains in the past three years as the Federal Reserve has worked feverishly to push interest rates to record lows to support theeconomy. Although the trend in interest rates is still low, with the federal balance sheet looking quite bloated, interest rates will eventually have to increase.

Action to Take –> Gross became the undisputed “king of bonds” through his incredibly successful Total Return mutual fund. But his new BOND looks to improve on that model with additional transparency, a competitive fee structure and no minimum investment requirements. And since the new ETF is handily beating its index, investors have now a new strategy to pump up their fixed-income returns.

This article was originally written by Michael Vodicka, and posted on StreetAuthority.