Bill Gross, co-head of the world's largest bond manager, repeated his call that interest rates would remain low for at least two more years.
"Our primary thrust has been to focus on what we are most (although not totally) confident about, that the Fed will hold policy rates stable until 2016 or beyond," Gross, co-chief investment officer of $1.97 trillion Pimco, wrote in a monthly note to clients Tuesday.
Gross made a similar pronouncement in July and has so far been right—interest rates are still near zero. At the same time, Pimco's largest mutual fund, the $247 billion Total Return Fund Class A, has struggled this year relative to other asset classes, especially stocks. It's down 3.2 percent year to date through November.
Gross warned that investors are putting money in risky assets that have gained in value largely because of central government policies.
"Investors are all playing the same dangerous game that depends on a near perpetual policy of cheap financing and artificially low interest rates in a desperate gamble to promote growth," he wrote.
(Read more: Why Pimco's Bill Gross fears Fed taper)
Gross said global economies and their "artificially priced" markets are "increasingly at risk." But he compared their eventual unwinding to the shape of an eagle's wings as opposed to a "T" shape. In short, deleveraging will likely occur gradually not suddenly.
"Aside from a financial nuclear bomb à la Lehman Brothers, our actual scenario is likely to play out more gradually as private markets realize that the policy Kings/Queens have no clothes and as investors gradually vacate historical asset classes in recognition of insufficient returns relative to increasing risk," the note said.
(Read more: Fed 'safety net' on stocks is shrinking: El-Erian)
Pimco's prescription is to front-end load portfolios, meaning to focus on bonds that mature earlier.
"Front-end Treasury, corporate and mortgage positions should provide low but attractively defensive returns," Gross wrote. "We have positioned our bond wars portfolio—heavily front-end maturity loaded along with credit, volatility and curve steepening positions, with the aim of outperforming Vanguard as well as many other active managers."
—By CNBC's Lawrence Delevingne. Follow him on Twitter @ldelevingne.