The fixed-income guru has recently weighed in with stock recommendations. Should you take his advice? Chances are, you already have.
Bill Gross saved the best for last during his keynote address at this year's Morningstar Investment Conference.
Early in his talk, the PIMCO chief pointed out that, as the tailwind provided by the Fed's aggressively accommodative monetary stance subsides, stocks will be left to suffer the slings and arrows of rising real interest rates, as well as the higher inflation that Gross (among many others) thinks the Fed may be engineering to help the U.S. inflate its way out of debt.
Yet, on their own or not, some companies--and the funds that invest in them--wouldn't merely survive that double whammy; they and their investors could thrive. Near the end of his talk, Gross--who manages nearly $250 billion in fixed-income assets at PIMCO Total Return
Cold Stock Tips
Gross also aired his views in an interview with CNBC at the conference, mentioning Procter & Gamble
"There's a huge gap and a huge differential," Gross said, "if an investor is willing to take a minor downgrade in terms of credit."
That's sound advice, but chances are you already have stakes in those companies through the mutual funds you own. Large-cap stalwarts all, they reside in the top fourth of the S&P 500's components. They're well represented in the portfolios of several widely held, topnotch mutual funds, too.
To say that Gross' recommendations are already widely held would be a similarly massive understatement.
Mutual fund investors who buy Gross' advice but who don't want to buy additional exposure to his stock picks have plenty of compelling options: choice funds whose above-average payouts owe partly to their major stakes in financially healthy dividend payers with little to no representation in the S&P 500.
Thornburg Investment Income Builder
The yield at Dodge & Cox Balanced
Gross framed his stock recommendations in a particular way: as Treasury alternatives for yield-seeking investors who would otherwise have a portion of their portfolios in Treasuries or other high-quality U.S. bonds.
With that in mind, it's important to note that, while AllianceBernstein and Maxim Integrated are fiscally fit, neither is in the same league, risk-wise, as the more buttoned-down behemoths Gross has touted. Owning them via high-quality mutual funds that sport their own above-average yields, however, provides a sensible way to generate income while angling for superior capital appreciation.