June 8 (Bloomberg) -- Bill Gross's British stamps, which go on auction in New York on June 11 to benefit a charity, have proven to be a better investment than his bond fund.

The manager of the world's largest bond fund stands to raise $5 million or more from the stamps he bought for $2 million, mostly in 2000, said Charles Shreve, Gross's stamp adviser. His $104 billion Total Return Fund had a 6.9 percent average annual return in the past 10 years, according to Morningstar Inc. data.

Values of collectibles are soaring as millionaires seek alternative investments or trophies. As one example, Macau casino entrepreneur Stanley Ho paid $1.8 million in May for Emperor Kangxi's throne, which sold in 1994 for $43,700, according to Christie's International. Gross's U.K. stamps may fetch as much as triple the price he paid seven years ago, said Michael Hall, chief executive officer of stamps specialist Stanley Gibbons Group Ltd.

``Prices are dictated by high-net-worth individuals,'' Hall said in a telephone interview. ``Baby boomers are approaching the age when they have money and time on their hands.''

Gross, the 63-year-old chief investment officer of Newport Beach, California-based Pacific Investment Management Co., had no time to discuss his stamps, said spokesman Mark Porterfield, who referred questions on the value of the collection to Shreve.

Dallas and New York-based Shreves Philatelic Galleries Inc., run by Charles Shreve and his wife Tracy, will sell Gross's British stamps, including 1840 Penny Blacks and Two Penny Blues, in two sessions on Monday to benefit Doctors Without Borders, or Medecins Sans Frontieres, according to the auction house's Web site.

Stamp Show

More than 1,500 pairs of catalogs were sold and a London show of the stamps last month drew many new potential bidders, Shreve said in a telephone interview.

``Bill Gross is very well known in the financial world, plus it's a charity sale and he has some great rarities,'' Shreve said.

Gross, who has a fortune of $1.2 billion, once turned $200 into $10,000 while playing blackjack in Las Vegas, according to Forbes magazine.

Starting with common modern stamps in his teens, he later pursued rare items as an investment, according to answers he drew up to frequently asked questions, Porterfield said in an e-mail. His most famous stamp is an 1868 One Cent ``Z'' Grill, one of two copies known and part of his complete collection of 19th-century U.S. stamps.

Top Collectors

Hall, who said he has done business with Gross via Shreve, valued Gross's remaining stamps at about $80 million. Shreve wouldn't confirm that, though he said Gross is among the world's top five collectors, along with retail billionaire Erivan Haub of Wiesbaden, Germany.

About $1 billion of rare stamps trade annually in the $10 billion-a-year stamp market, Hall said. ``It's not like this sale floods the market,'' he said.

Gross's Total Return Fund returned 4 percent last year, beating more than 54 percent of its peers, according to data compiled by Morningstar.

The fund returned 5.2 percent on average in each of the past five years, beating more than 70 percent of its peers.

Pimco, which oversees about $668 billion, is a unit of Munich-based insurer Allianz AG.

Rare British stamps in the Stanley Gibbons GB30 Rarities index had an average annual compound increase of 13.5 percent in the past five years, Hall said. The most commonly traded stamps in the SG100 index had an average annual return of 6.6 percent, he said.

To contact the reporter on this story: Linda Sandler in London at lsandler@bloomberg.net.

Last Updated: June 8, 2007 05:50 EDT