'We're Picking Quality,' Says Pimco's Bill Gross

Risks are rising, and that has Pimco investing in higher quality, highly liquid investments, bond investor Bill Gross told CNBC's "Street Signs" on Wednesday.

"We're buying what the Fed's buying to avoid the complexities of risk going forward," Gross said.

He noted that geopolitical risks are on the rise as tensions build on the Korean peninsula, and there are changes in the euro zone following the Cyprus bailout that may create additional risks investors would want to avoid. (Read More: Citing N.Korea, US Orders Missile Defense to Guam)

"Pimco is investing in higher quality, highly liquid, yes, Treasurys," Gross said.

But the situation in North Korea shouldn't be the primary factor driving investors back into U.S. government debt—at least not yet.

"I think the reason to buy Treasuys is simply the economy itself may be slowing and credit isn't infusing as much enthusiasm into risk assets as it used to," Gross told CNBC.

He added that once the Federal Reserve and mutual fund investors stop buying as much as they're buying, the liquidity has washed over markets will disappear or at least dissipate, "and investors should be concerned at that point to own highly liquid and high-quality investments."

Gross also said he and other investors of the past 30 or 40 years may have been successful because the investing environment was so favorable.

He told CNBC, "What we've experienced over the past 30 or 40 years is an epochal expansion in credit, a decline in interest rates to near zero and expansion of P/Es and profits. It's a fair question to ask whether those conditions continue during a future epoch."

In his monthly investment outlook, Gross suggested that he and other renowned investors like Warren Buffett and George Soros "have cut our teeth during perhaps a most advantageous period of time, the most attractive epoch, that an investor could experience."

What makes a great investor, Gross said, is an ability to adapt to a changing epoch—perhaps one ushered in by near-zero interest rates.

"What if zero-bound interest rates define the end of a total return epoch that began in the 1970s, accelerated in 1981 and has come to a mathematical dead-end for bonds in 2012/2013 and commonsensically for other conjoined asset classes as well?" he wrote.

(Read More: Pimco's Bill Gross Looks at the Man in the Mirror)