In an interview with Germany's Boersen-Zeitung newspaper, Mather, Chief Investment Officer for U.S. core strategies at Pimco, said: "Even if interest rates gradually increase, with a global portfolio of bonds with the best creditworthiness you can maybe expect a return of about 3 percent in the coming years."

He said investors could earn a "little more" but not much more with equities.

Pimco's flagship Total Return Fund has seen heavy outflows since Gross announced last month he was leaving the Newport Beach, California-based firm he started in the 1970s to join smaller rival Janus Capital Group (>> Janus Capital Group Inc).

Mather, who told the paper the investment process would not change with Gross gone, said he saw opportunities in peripheral euro zone countries and in contingent convertible "CoCo" bonds, a complex form of hybrid debt.

He said that many CoCo bonds had been issued and not all of them had found investors. "We believe they are cheap," he told the paper.

Pimco is a unit of German insurance group Allianz (>> Allianz SE).

(Reporting by Victoria Bryan; Editing by Noah Barkin)

Stocks treated in this article : Janus Capital Group Inc, Allianz SE