Bill Gross Slashes Government Bond Holdings Again

02-15-2011 • blogs.wsj.com

The Pimco Total Return Fund is the world’s largest bond fund, so Bill Gross’ market moves and musings can carry a lot of weight in the markets. Gross is founder and co-chief investment officer of Newport Beach, Calif.-based Pimco. Billy has been griping quite a bit lately about the current policy stance of the Fed, most lately calling it a “Devil’s Bargain.” He argues that the Fed’s super low rates “are robbing savers and taking money surreptitiously from longer-term asset holders who are incorrectly measuring future inflation.” Anyway, Gross continues to actively cut his holdings of Uncle Sam’s debt of late. Dow Jones Ming Zeng writes Monday: Bond fund giant Pacific Investment Management Co. slashed the U.S. government-related holdings in its flagship bond fund in January to multi-year lows. Fund managers from Pimco have fretted about U.S. fiscal deficits in recent months. They had also argued that demand for Treasurys will wilt as signs that the U.S. economy is gaining traction are luring investors into riskier assets with the prospects of higher returns. The U.S. government-related holdings for the Pimco Funds Total Return Fund fell to 12% from 22% in December, according to data available on the company’s website. The holdings of mortgage-backed securities fell slightly to 42% from 45% in December. The holdings of emerging-market debt were unchanged at 9% in December. In December, holdings of Treasurys, Treasury inflation-protected securities, agencies’ bonds and Treasury futures and options for Pimco Total Return Fund fell to 22% in December from 30% in November, according to data on the company’s website Friday. That was the lowest level since 15% in February 2009.