The New Normal? Bond Managers Buying Stocks.

This one is for the hard of hearing and the folks all the way in the back of the auditorium…

Bill Gross, the “Bond King”, has just changed the rules to allow for the buying of equity-linked securities in his Pimco Total Return flagship fixed income fund (the largest mutual fund on earth).

My “tidal wave of money out of bonds into stocks” call from October (When the Levee Breaks) is looking ridic right about now.  Oh yeah, on August 26th, I told you you they were coming for that long bond.  I was 30 days or so early (Save This Post Like It Was Private Ryan).  Many in the blogosphere were all over this.

From Bloomberg:

Bill Gross’s Pimco Total Return Fund, the world’s largest mutual fund, is expanding its policy to allow investments in equity-linked securities for the first time since 2003.

Pimco Total Return may put as much as 10 percent of assets in securities including preferred stock and convertible bonds as early as the second quarter of next year, according to a filing today with the U.S. Securities and Exchange Commission. The fund won’t invest in common stock, the Newport Beach, California- based firm said.

Gross wants to buy common stocks so bad he can taste them.  By the way, pay no attention to all those equity ETFs that Pimco is working on…

The Bond King hates bonds.  What more do you need to hear?

Source:

Pimco Total Return May Buy Equity Linked Securities (Bloomberg)