Worth over $2 billion, Pimco’s Bill Gross should be enjoying his retirement now (he’s 67 years old). But instead, it seems that managing the world’s largest bond fund — the Total Return Fund (MUTF:PTTRX) — is much more fun. Gross has been at its helm since 1971.

Unfortunately, last year was horrible for him. His fund returned only 4.2%, which was at the bottom third of its peers.

Gross made one of his worst calls — that is, that U.S. Treasuries would get whacked because of the Federal Reserve’s termination of the second phase of its quantitative easing program (QE2). But instead, he missed out on one of the year’s best investments (the return was nearly 10%).

While Gross was correct that the world economy would be shaky, he didn’t realize that U.S. debt would become a magnet for jittery investors. As a result, the Total Return Fund suffered $5 billion in redemptions. It was the first outflow since the late 1980s.

Now, Gross was certainly not the only one who blundered in 2011. Other top investors also got crushed, such as John Paulson. Keep in mind that Paulson’s Advantage Plus Fund was off by a grueling 47%.

But more important, Gross still has one of the best long-term track records in the bond business. Just look at these stats from Morningstar:

And the Total Return Fund is more than just the handiwork of Gross. He has built a sophisticated infrastructure and employs some of the best analysts and money managers.

So what is Gross’s strategy now? He’s actually getting aggressive with Treasuries, which is probably a good move. Gross has also gotten even more gloomy on the macro economy. While he once called the slow-growth scenario the “new normal,” it has now become the “paranormal”!

His thesis is that there’s still too much debt across the world — and it will need to be dealt with. If policymakers don’t do anything about it, then the markets will. And this will likely be a brutal process.

OK, perhaps some of this heavy analysis is just Gross being mad about his performance. But that seems unlikely for someone who has such a strong long-term track record. Like any top investor, he tries to find the right data and find the right trends.

Now, if Gross is correct in his assessment, it actually means bonds will be a good investment in 2012. But investors still need to be selective. As he notes: “You usually get what you pay for in this world and nothing comes for free.”

As a result, Gross believes it’s smart to hedge things — such as by focusing on quality. This is for both fixed income as well as stocks, including those that provide hefty dividends.

This is a trade that worked quite well last year. And if 2011’s volatility continues, it stands a good chance of working in 2012 as well.

Tom Taulli runs the InvestorPlace blog “IPOPlaybook,” a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned stocks.