Most of the talk about fixed income these days seems to be focused on the inevitable rise in interest rates and of the return on 10-year Treasury notes. That’s not what Bill Gross, CIO of Pimco, who’s been dubbed the “Bond King,” told a packed house at the opening of the Morningstar Investment Conference on June 21 in Chicago.

He began by noting that there was “a mild reversal” at Pimco’s secular forum last month. “For the last few years we had been positing this struggle between disinflation and reflation,” he noted. While he said that the struggle continues, “it had been a pretty even tug of war up until this May.”

Gross predicted that in the next two years disinflation will ultimately triumph and that as a result bond managers will need to pay greater attention to duration. “We think it’s important to extend your maturity and to lock up those yields now as opposed to later at what we think are going to be lower rates.”

Unlike many other observers, Gross thinks that the rate for 10-year bonds will be in the 3% to 4.5% range. He’s not arguing that investors should load up now, he said, but he does think “that’s where we’re heading.”

For advisors, Gross offered one simple piece of advice–”reduce expenses.” He points out that in a low-interest-rate environment, investors can’t afford to have gains eaten up by costs, and that there are still plenty of opportunities in stocks, bonds, real estate, and other areas.