World's Leading Investors Fear Deflation

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Some of the world's leading investors are becoming more worried about the possibility of deflation, according to the Wall Street Journal.

"Deflation isn't just a topic of intellectual curiosity, it's happening," said Bill Gross, who runs the $239 billion mutual fund Pimco Total Return Fund. He cited an annualized 0.1% decline over the past two years in the U.S. consumer-price index. "It's an uncertain world that's tipping toward deflation."

As a result, the fund is changing their investment strategy, just in case. They will buy securities that return payments -- like bonds, which have interest payments or stocks that pay dividends.

However, some investors say attractive investments are getting more difficult to find. Some say utilities and companies with stable cash flows and government bonds are the safest bets.

"We fear that core inflation readings in the United States could dip into outright deflationary territory in coming months," Argonaut Capital, whose returns are flat for the year, recently told investors. "This should be a positive for longer-dated fixed income."

Still, no one is sure if deflation is actually coming, but as the economy stays weak, experts say the possibility is growing.

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