Gross' fixed income picks from Barron's

A trio of closed-end funds selling at discounts to NAV get early boosts after Bill Gross recommends them at the Barron's Roundtable over the weekend.

The Pimco Dynamic Income Fund (PDI +2.1%) launched in May 2012 near the low in interest rates, but is still 20% higher today, in addition to making hefty payouts. One of the managers is Daniel Ivascyn who was just elevated to Pimco's deputy CIO after the resignation of Mohamed El-Erian. Magazine cover indicator types will want to know Ivascyn was just named to Morningstar's Fixed Income Managers of the Year.

PDI yields 7.85%, but a special dividend boosted 2013's return to 12%. It is slightly levered and invests in nonagency MBS. "The fund could have a lot of firepower if the housing market holds up."

For those with interest in tax-free income, Gross suggests the Pimco Municipal Income Fund II (PML +1.5%), trading at a slight discount to NAV and holding no debt of Puerto Rico or Detroit.

Selling at an 8% discount to NAV at last check is the Reaves Utility Income Fund (UTG +1.2%).

For high yield debt, Gross suggests an ETF, the Pimco 0-5 Year High-Yield Corporate Bond Index (HYS +0.1%) - the shorter duration should limit risk if spreads widen.

Comments (3)
  • bobster06
    , contributor
    Comments (56) | Send Message
    After reviewing them in more detail, they look like very good recommendations. Not surprised they got a boost today.
    27 Jan 2014, 10:58 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (11388) | Send Message
    Some of the easiest money in the market right now can be found here.
    27 Jan 2014, 12:17 PM Reply Like
  • NYer1
    , contributor
    Comments (3031) | Send Message
    Interesting comments b Bill Gross at the Barron's Roundtable last weekend:
    "Gabelli: Bill, what do you do with your own money?
    Gross: I own some Reaves Utility Income and Pimco Dynamic Income. I own lots of closed-end funds that sell at discounts to net asset value and borrow money in the current environment."
    When asked for some of his best ideas he highlighted PDI as his first recommendation and also indicated it trades at a discount of above 5% to its NAV.
    Note that PHK was NOT mentioned..I wonder why..ohh..right..the "slight" premium of about 50% ABOVE NAV!!
    29 Jan 2014, 04:06 AM Reply Like
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