Goldman Shuns Bonds Pimco’s Gross Favors in ‘New Neutral’

As Bill Gross vows to restore top performance at the world’s biggest bond fund, he’s taking a path many of his rivals shun.

Gross, who manages the $230 billion Pimco Total Return Fund at Pacific Investment Management Co. in Newport Beach, California, is betting five-year Treasuries, which are more sensitive to changes in the central bank rate than longer-dated bonds, will do well because markets overestimate how much the Federal Reserve will raise interest rates. Bond managers at Goldman Sachs Group Inc., BlackRock Inc. and JPMorgan Chase & Co. say he’s wrong and the intermediate bonds he holds will suffer when the Fed lifts borrowing costs.