Contrary Opinion! "You don’t need Pimco’s Bill Gross or his bond fund"

From Chuck Jaffe at Market Watch:

"...Last week, PIMCO’s Bill Gross — the world’s most famous and influential bond-fund manager — suggested that investors looking for good yields give up on Treasurys, consider foreign bonds and, notably, high-quality, dividend-paying stocks...

The message wasn’t exactly new, but the takeaway was different.

If the recommendation was to buy stocks — something Gross’s flagship fund, PIMCO Total Return can’t do — and to make money by being a more nimble purchaser of bonds, then Gross was effectively suggesting that investors buy something besides his fund.

And he’s right, because looking at PIMCO Total Return, there’s a strong case to be made that it’s the Stupid Investment of the Week.

Stupid Investment of the Week highlights conditions and characteristics that make a security less-than-ideal for the average investor. While it is hard to imagine that the world’s preeminent bond manager is suddenly going to turn stupid relative to his peers — and this column is not intended as a sell signal — there’s a strong case to be made that investors would be better off going elsewhere, even in the bond-fund world...

At this point, the problem with PIMCO Total Return is that it’s too big. With Gross having shown his disdain for Treasurys — though he is heavily invested in mortgage-backed securities, which functionally is a distinction without much difference — and trying to seek yield elsewhere, size is, well, a giant problem.

Where Gross might once have added value by finding the best bond deals and executing them better than the competition, today even the best deals are too small to have much impact on the fund...."

Read the full story at this link:  http://www.marketwatch.com/story/you-dont-need-pimcos-bill-gross-or-his-bond-fund-2011-06-17?reflink=MW_GoogleNews

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Being too big has hurt other funds.  Fidelity Magellan?  American Funds' Growth Fund of America?  We have a link to Bill Gross' monthly commentary on the left column of this blog.  Keep following Bill Gross.