"Too much debt, geopolitical risk and several bubbles have created a very unstable environment which can turn any minute," Bill Gross said."More than any point in the past 20 or 30 years, there's potential for a reversal."
Pimco manages $400 billion in bonds, about a third of which is outside the United States, and has outperformed the market over the past 30 years.
"With all this consumer debt, business debt, government debt, smaller movements in interest rates have a magnified effect ... a small movement can tip the boat," he said.
Gross said Pimco's broad plan was to "stay ahead of reflation" by keeping money out of the United States and in countries such as Britain and Germany that would not be as badly hit by inflation.