Bill Gross founded Pacific Investment Management Company in 1971 and built it into one of the world’s largest fixed income managers. The company has more than $750bn of assets under management and is now an independent unit of Allianz, the German financial services group, which bought the bond manager in 2000.

The 63-year-old author of Everything You’ve Heard About Investing is Wrong , Mr Gross is Pimco’s managing director and chief investment officer. He recently hired Alan Greenspan as a consultant and persuaded Mohamed El-Erian to leave the $35bn Harvard endowment fund after 18 months in the job and return to Pimco.

Mr Gross recently sold his vast collection of British stamps for $9m, donating the proceeds to Médicins sans Frontières, the medical aid organisation.

In a video interview with FT.com, Mr Gross, a registered Republican, criticises the US government’s response to the subprime crisis and warns a recession has already taken hold. Edited highlights appear below.

Earlier this year you talked about having made a big mistake because your fund was trailing some other funds. In light of subsequent events were you right?

We had the strategy correct for a good 12 months. It’s just that the markets and the economy didn’t come our way until the last six. Yes, it was premature and we could have made more money. But we’re satisfied with 2007.

Some other firms, such as Blackrock, have leap-frogged you in size, partly through making acquisitions. Does that bother you?

Our $750bn (£377bn) plus in assets is home-grown . . . some other firms have gone the acquisition route.

You’re not tempted to make some big acquisitions of your own?

We’ve been so successful in growing at a 10, 15, 20 per cent rate internally that it’s difficult to justify prices in multiples of 15 to 20 times for someone else’s growth.

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