US is 'best of the worst' investment: PIMCO's Gross

Bill Gross, the world's biggest bond fund manager at PIMCO, said the United States is the least bad choice in a poor global investment environment, but this could change if Washington doesn't get control of the nation's fiscal situation.

"Timing in investment markets is critical and at the moment, the US is considered to be the cleanest. That's why PIMCO owns them. But things change," 68-year-old bond guru wrote in his latest investment outlook on Thursday.

Gross, co-founder of Pacific Investment Management Company, in his July letter, noted that over time, "a good name can be slandered," alluding to what he sees as a possibility for the US if it doesn't get its fiscal house in order.

He said that in an environment with "negative real rates on Treasuries," the quest by pensions to generate a 7% return on investment was elusive and possibly not achievable for years.

He cautioned investors against chasing securities and investments that seem to offer better returns, especially debt from countries less financially stable than the United States.

"Sovereign nations as well cannot all be counted on to guarantee a return of principal, let alone a return on investment that comes anywhere close to matching 7% in nominal terms."

Still, while the US represents the best investment choice of a bad lot, that may not last forever, Gross said.

"This debt crisis should be considered global as opposed to regional, and investors should recognize that clean dirty shirts are not forever thus."