Bill Gross in December boosted Treasury bond holdings in the
world's biggest bond fund to the highest level since July while
cutting mortgage-backed bond holdings to the lowest since
October.
The share of Treasury bonds in the $285.4 billion Total Return
Fund (PTTRX) at Pacific Investment Management Co. rose to 14% at
the end of December, up from 11% in November, according to the data
released on the company's web site Thursday afternoon.
Mr. Gross kept Treasury inflation-protected bonds unchanged at
12% for December and, including TIPS, the total holdings of
Treasury debt rose to 26% from 23% in November.
In contrast, the share of MBS fell to 42% in December from 44%,
the sixth straight month Mr. Gross cut exposure to the sector. MBS
still accounts for the largest share of the fund.
The move confirmed Mr. Gross's comments late last month to Dow
Jones Newswires that he continues to lighten up on MBS, its main
trade in 2012 that boosted the fund's performance.
Early in 2012, Mr. Gross's fund placed bets that the Federal
Reserve would buy MBS as part of its efforts to support the
economy, making these instruments the largest holding in its
portfolio. That proved correct when the Fed launched an MBS-buying
program in September, lifting prices of these bonds.
Mr. Gross's fund handed investors a return of 10.4% in 2012,
beating the 4.2% of the Barclays U.S. Aggregate Bond Index,
according to data from fund tracker Morningstar Inc.
Over the past 15 years, the fund has posted an average,
annualized return of 7.1%, compared to 5.8% from the benchmark
index.
Mr. Gross is founder and co-chief investment officer at Pimco.
Part of Allianz SE (ALV.XE, ALIZF), Pimco is one of the world's
biggest asset-management companies, with about $2 trillion in
assets under management.
Write to Min Zeng at min.zeng@dowjones.com
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