MORE BOND RISK?

September 16, 2008
Michael Sheehan

Physician's Money Digest, March15 2003, Volume 10, Issue 5

If you have accumulated a significantamount of cash parked inUS Treasuries or highly rated corporatebonds, you may want tothink about adding some risk toyour portfolio. According to bondguru Bill Gross, manager of thePimco Total Return Fund (800-877-4626), interest rates can hardlyfall any further, which means nouplift for bond prices.

New York Times

Instead, Gross says, it's morelikely that interest will stay level oreven rise, chopping bond-fundyields in half from last year's gainsof 10% or more. Where to go?According to a article,Gross has spiced up his personal401(k) with a smidgen ofemerging-market bonds and high-yieldingjunk bonds. In his fund,Gross also holds low-rated but stillinvestment-grade bonds, like thoseissued by AT&T. Gross seems toknow what he's talking about. Inthe face of massive markets losses,his fund has a 3-year average annualreturn of 10%.