Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said investors may be at a disadvantage for as much as 15 years as the U.S. keeps borrowing rates low to reduce its debt burden.
“Savers are being disadvantaged” when compared with creditors, Gross said during an interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene.
Pimco’s $240.7 billion Total Return Fund had minus 4 percent of its assets in government-related debt last month and can have a so-called negative position by using derivatives, futures or by shorting. Shorting is borrowing and selling an asset in anticipation of making a profit by buying it back after its price has fallen.
Gross said earlier this month that the firm has a short position in short-term LIBOR bank-related swaps, one component of the government related category that also comprises agency bonds, interest-rate swaps, Treasury Inflation Protected Securities, or TIPS, Treasury futures and options and corporate securities guaranteed by the Federal Deposit Insurance Corp.
Cash and equivalents, the largest component of the fund, rose to 37 percent of holdings in April from 31 percent. Mortgage bonds declined to 24 percent from 28 percent, the Newport Beach, California-based company said on its website earlier this month.
The Total Return Fund returned 7.83 percent in the past year, beating 82 percent of its peers, according to data compiled by Bloomberg. The fund gained 0.65 percent in the past month, better than about 19 percent of its competitors. Pimco is a unit of Munich-based insurer Allianz SE.
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