El-Erian: Put your money on U.S., emerging markets

Markets in the United States and some emerging economies are the best investment opportunities at this time, according to Pacific Investment Management Co. LLC's Mohamed El-Erian. The United States as the preferred option “speaks to lots of investment opportunities that are better than what you see elsewhere in the advanced world,” Mr. El-Erian, chief executive and co-chief investment officer of the world's largest manager of bond funds, said last week during an interview on Bloomberg Television. “Let's not forget that the emerging world offers opportunities in the local rates, and external credit and some equity markets.”

ECONOMIC EXPANSION

The U.S. economy is forecast to expand 2.2% this year and 2.4% in 2013, according to the median estimate of economists surveyed by Bloomberg. Treasury bonds had returned 1.7% and U.S. company debt had gained 5.3% this year through June 30, according to Bank of America Merrill Lynch indexes. The S&P 500 had appreciated 9.1% through June 30. The United States is on course for tax cuts enacted under President George W. Bush to expire at the end of this year and for more than $1 trillion of automatic spending reductions to take effect in January.

LITTLE MOVEMENT

Investors are exposed to risks from the so-called “fiscal cliff,” which could cut economic growth by about 4%, Mr. El-Erian said. “We would like our politicians to get their act together quicker,” he said. “You're not going to see much done, and we're probably going to have to wait until the lame-duck session to see decisions out of Washington.”