Gross Says Brazil Not Pimco’s Emerging-Market Favorite

Photographer: Andrew Harrer/Bloomberg

Pacific Investment Management Co. co-Chief Investment Officer Bill Gross said the firm still finds Mexican debt attractive. Close

Pacific Investment Management Co. co-Chief Investment Officer Bill Gross said the firm... Read More

Close
Open
Photographer: Andrew Harrer/Bloomberg

Pacific Investment Management Co. co-Chief Investment Officer Bill Gross said the firm still finds Mexican debt attractive.

Pacific Investment Management Co.’s Bill Gross, hurt by a wrong-way bet on Brazil last year, said the nation is no longer a preferred emerging market for the world’s largest fixed-income manager.

Gross, speaking at the 2014 ETF Virtual Summit, said the firm still finds Mexican debt attractive. Gross is co-founder and chief investment officer of Newport Beach, California-based Pimco.

Pimco’s biggest funds were bullish on Brazil in 2013, a wager that hurt performance. Gross wrote in a Twitter message a year ago that the Brazilian currency, the real, was a better use of cash than high-yield bonds. The real fell 13 percent against the dollar last year, while U.S. high-yield bonds climbed 7.4 percent, based on the Bank of America Merrill Lynch U.S. High-Yield Index.

Brazilian bonds and currency represented the largest holdings in the $11.5 billion Pimco Emerging Local Bond Fund (PELBX) as of Sept. 30, according to Pimco’s website. Other Pimco funds that blamed the Brazil wager for detracting from performance were Gross’s Pimco Total Return, Pimco Low Duration, Pimco Unconstrained and Pimco Commodity RealReturn Strategy.

Local-currency Brazilian notes lost 11 percent in dollars in 2013 compared with the average 6.9 percent drop in emerging markets tracked by JPMorgan Chase & Co. The Brazilian debt was hurt by a combination of slow growth and accelerating inflation. The real has tumbled 7.4 percent in the past three months, the second-worst performance among 16 major currencies tracked by Bloomberg after South Africa’s rand, on concern fiscal deterioration will lead to a lower credit rating.

To contact the reporter on this story: Alexis Leondis in New York at aleondis@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.