The New Neutral is Well Underway

Pimco's Bill Gross called his new secular investment theme "the new neutral". Gross expects slow economic growth and low real interest rates over the next five years, and this will fuel the hunt for yield. We can already see the hunt for yield playing out in the year-to-date PerfChart showing the Russell 2000 ETF (IWM), Nasdaq 100 ETF (QQQ) and three high yield alternatives. It is not even close. The Utilities SPDR (XLU), REIT iShares (IYR) and 20+ YR T-Bond ETF (TLT) are easily beating the stock market this year.


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