Tags: Gross | August | Treasurys | Pimco

Pimco's Gross Cut Government Debt in August as Treasurys Rallied

Wednesday, 10 September 2014 06:06 PM

Bill Gross reduced Treasurys and government-related debt in his flagship fund during August as slowing European growth and turmoil in Ukraine drove investors to U.S. government securities.

The proportion of U.S. government-related debt in Pacific Investment Management Co.’s $222 billion Total Return Fund was 41 percent, versus 45 percent in July, data posted on the company’s website showed. That compared with 50 percent in May, the highest level since July 2010.

Gross has been betting on shorter-term Treasurys with a view that the Federal Reserve won’t raise interest rates too soon. The securities, which are sensitive to investor expectations of monetary policy, have underperformed longer-term debt as signs of U.S. economic improvement have bolstered the case for rate increases.

Pimco, based in Newport Beach, California, doesn’t comment directly on monthly changes in holdings or specific types of securities within a market sector. Its U.S. government-related category includes holdings of U.S. Treasury notes, bonds, agency debt, interest-rate swaps and inflation-protected securities.

The Total Return Fund has gained 3.69 percent this year, beating 42 percent of its peers, according to data compiled by Bloomberg. Last year it lost investors 1.9 percent, the most since 1994, trailing 65 percent of peers.

The fund had $3.9 billion of net investor withdrawals in August, the 16th straight month of redemptions that began in May 2013 as performance faltered, Chicago-based researcher Morningstar Inc. said Sept. 3 in an e-mailed statement. The withdrawals brought the fund’s assets down from $293 billion last year.

Developed, Emerging

Non-U.S. developed debt fell to 13 percent, from 17 percent, which was the most since December 2011, in the world’s biggest bond fund. Emerging-market securities were unchanged from July at 9 percent, equal to the highest level since March 2012.

Gross kept the Total Return Fund’s mortgage-bond holdings in August at 20 percent. The proportion of money-market debt and net cash-equivalent securities was negative 1 percent, compared with negative 8 percent in July.

The fund’s holding in the U.S. credit category, which includes investment-grade and high-yield securities, was 13 percent last month, compared with 12 percent the previous month, according to the data.

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Bill Gross reduced holdings of Treasurys and government-related debt in his flagship fund during August as slowing European growth and turmoil in Ukraine drove investors to U.S. government securities.
Gross, August, Treasurys, Pimco
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2014-06-10
Wednesday, 10 September 2014 06:06 PM
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