Tags: Pimco | Buys | Treasurys | bonds

Pimco Buys Treasurys Months After Ditching Them

Wednesday, 14 Sep 2011 07:50 AM

Pimco, the world's largest bond fund, is buying more Treasurys these days, just a few months after fund executives saying they didn't like U.S. debt, The Wall Street Journal reports.

Pimco manages $1.3 trillion in assets and increased its Treasury holdings to 16 percent of the fund's portfolio by the end of August from 10 percent by the end of July.

Pimco fund manager Bill Gross has said calls to avoid Treasurys were mistakes.

Bill Gross
(Pimco file photo)
The Pimco Total Return Fund, a $245.3 billion mutual fund, has run into some potholes this year although calls against Treasurys appear not to be the only reason.

Bets of $11 billion in the second quarter on an index of U.S. corporate credit risk, other moves into insurance the fund provides on sovereign debt and $1.3 billion pumped into Italian Treasury bonds linked to inflation are hurting as well, Bloomberg reports, citing regulatory filings.

"People are focusing on the Treasurys, but the real issue is that the other credit instruments didn't do as well," A. Michael Lipper, head of Lipper Advisory Services, a Summit, New Jersey, firm that advises institutions on investing in mutual funds, tells Bloomberg.

Still, other experts say selling Treasurys and buying corporate debt is a good long-term strategy.

"There will still be some bouts of volatility with the uncertainty going on in Europe and the unresolved lawsuit issues surrounding mortgages in the banking sector," Michael Krushena, a senior portfolio manager at Birmingham, Michigan-based Munder Capital Management tells Bloomberg.

"But looking further out than the next two or three months, we think corporate bonds are better investments."

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