"Corporate profits as a percentage of gross domestic product are 13 percent versus an average of 9 so profits are doing very well but really at the expense of labor," Gross said. "It's labor that is being laid off and not rehired and labor that is not earning an attractive wage. It's due to globalization and that there are choices for corporations."
Gross's Total Return Bond Fund, which is having its worst run this year since at least 1995, regained its spot among top bond funds last month as investors returned to riskier assets. The $244 billion fund, the world's biggest mutual fund, rose 1.7 percent in the past month, beating 93 percent of rivals and accounting for almost half of the fund's 3.6 return so far this year, according to data compiled by Bloomberg.
Gross, who last month told clients he hasn't lost his touch after missing the biggest quarterly rally in Treasuries since 2008, was helped by a rebound in riskier assets such as corporate credit and non-U.S. holdings. Total Return has 21 percent of assets in corporate debt and 33 percent in securities outside the U.S., and owns inflation-linked bonds that rise with expectations for higher consumer prices.
Sovereign Debt
Gross, the founder of Pimco, has trailed 71 percent of competing funds in 2011 after he got out of Treasuries in the early part of the year, missing a rally when investors rushed to the safety of government-backed debt amid the European sovereign-debt crisis. That's his worst performance relative to peers since at least 1995, the earliest year for which Bloomberg has rankings for the fund.
Pimco continues to favor sovereign debt of nations including the U.S. and U.K. where central banks are keeping interest rates low and embarking on monetary stimulus programs such as debt purchases, said Gross, who serves as co-chief investment officer with El-Erian.