January 19, 2016 / 8:59 PM / 2 years ago

Bill Gross on CNBC says investors should stay with U.S. Treasuries

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Bill Gross speaks at the Morningstar Investment Conference in Chicago, Illinois, June 19, 2014.Jim Young

NEW YORK (Reuters) - Bill Gross, the closely followed investor, said on CNBC on Tuesday that investors should stick with U.S. Treasuries in the wake of recent market turmoil.

"I would stick to high-quality sovereign debt, as in U.S. Treasuries," said Gross, who runs the Janus Global Unconstrained Bond Fund (JUCAX.O).

Gross also recommended investors should consider Build America Bonds, which are taxable municipal bonds that carry special tax credits and federal subsidies for either the bond issuer or the bondholder.

"There are a lot of closed-end funds that are selling 10-15 percent discounts to net asset values. That means you are buying something at 80-95 cents on the dollar," Gross said. "Some of these closed-end funds deal in, yes, relatively high-quality municipal bonds."

Last year, the Janus Global Unconstrained Bond Fund outperformed a comparable fund at Gross's former employer, Pimco.

The Janus Global Unconstrained Fund was down 0.43 percent last year while the Pimco Unconstrained Bond Fund was down 2.22 percent for the same time period, according to data from Morningstar. The Janus Global Unconstrained portfolio surpassed 66 percent of its peers in 2015, Morningstar said.

Pimco declined to comment.

Reporting By Jennifer Ablan; Editing by Jonathan Oatis

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