In his January 2008 "Investment Outlook," PIMCO's Bill Gross forecasts a 3.00% Fed Funds rate by midyear, a significant drop from the current level of 4.25%. He believes that recent drops in short-term interest rates will be inadequate to offset tighter lending conditions. As financial derivatives continue to implode, he expects lower interest rates and increasing federal deficits. Click here for the full report.
For calendar year 2007, Gross' PIMCO Total Return Bond Fund outperformed 99% of other mutual funds in the intermediate-term bond fund category, according to Morningstar. The full-year 9.1% total return of the fund's retirement shares outperformed the Lehman Aggregate Bond Total Return Index by an amazing 2.1%. The fund continues to measure up to investors' high expectations.