Gross raises government debt holdings in flagship fund

Pimco's Bill Gross raised the percentage of Treasuries and other U.S. government-related debt in his flagship fund in October after the Federal Reserve unexpectedly maintained its bond purchases.
DEC 03, 2013
Pacific Investment Management Co.'s Bill Gross raised the percentage of Treasuries and other U.S. government-related debt in his flagship fund in October after the Federal Reserve unexpectedly maintained its bond purchases. The proportion of U.S. government and related debt in the $248 billion Total Return Fund (PTTAX) climbed to 37%, from 35% the prior month, data on Pimco's website show. Mortgage debt fell to 34%, from 35% in September. The company doesn't comment directly on monthly changes in holdings or specific types of securities within a market sector. Mr. Gross has been recommending that investors purchase shorter-term Treasuries as the Fed weighs tapering its bond buying under the quantitative-easing stimulus strategy and the market underestimates how long it will then take the central bank to begin raising interest rates. Mr. Gross anticipates the central bank will become more accommodative under Janet Yellen. The U.S. is growing slowly and inflation levels are at “unacceptable, dangerous territory at the moment,” Mr. Gross said in a Nov. 8 radio interview on “Bloomberg Surveillance” with Tom Keene. The Fed is “moving into forward guidance in a big way, and at some point we may expect to see a nominal GDP target, as well as a higher inflation target in the United States.” Ms. Yellen, vice chairman of the Federal Reserve, faces a confirmation hearing Thursday after being nominated to succeed Ben S. Bernanke as chairman. The Total Return Fund's holdings of U.S. credit, which includes investment-grade and high-yield securities, rose to 10%, from 9%. The category previously was separated into two sectors. Its emerging-markets debt holding was at 6%, the same as in September. Over the past five years, the Total Return Fund has returned 7.66%, outperforming 70% of competitors. It gained 0.36% over the past month, outperforming 71% of its peers, according to data compiled by Bloomberg. The fund's government and Treasury debt category includes holdings of U.S. Treasury notes, bonds, agency debt, interest-rate swaps and inflation-protected securities. (Bloomberg News)

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