Investors should expect steady, but not dazzling returns in any asset class, given real economic growth of only 1 percent to 2 percent, bond giant Pimco's CIO Bill Gross told CNBC Wednesday.
"I think most asset classes are attractive but will only provide 4 percent to 5 percent returns going forward," Gross said.
Pimco's economic growth forecast is based on the investment firm's "new normal" outlookfor the economy.
Investors can get higher returns — closer to 7 percent or 8 percent — by investing in high-yield or "junk" bonds, but only if they are willing to take on extra risk, Gross said.
"You can’t produce more (return) than the economy itself is producing," he said. "We tried that for the last 20 to 30 years."
Instead of counting on higher returns, people will simply have to continue to work, Gross said.
"Pensioners and even those employed in their late 50s and late 60s, will extend that employment so they can continue to survive," he said.
The economic picture won't change without an industrial policy directed at increasing clean energy, infrastructure spending and manufacturing, areas that can produce jobs, Gross said.
"We have to be competitive relative to global leaders such as China, and that means reinitiating our manufacturing thrust, not just in clean energy and infrastructure, in goods we export to world, in terms of being an exporter rather than a consumer," Gross said. "That really is the future of the United States and more policy should be directed at that."
A different viewpoint: