Pimco Total Return cuts mortgage, U.S. government holdings in March: website

Wed Apr 9, 2014 7:09pm EDT
 
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By Sam Forgione

NEW YORK (Reuters) - The Pimco Total Return Fund, the world's largest bond fund, cut its holdings of U.S. government-related securities and mortgages for the second straight month in March on continued bets that the Federal Reserve will conclude bond purchases this year, data from the firm's website showed on Wednesday.

The fund, which has $232 billion in assets and is managed by Pimco co-founder and chief investment officer Bill Gross, cut its holdings of U.S. government-related securities to 41 percent in March from 43 percent in February, and cut its mortgage holdings to 23 percent in March from 29 percent in February.

The fund's decrease to mortgage securities in March kept the stake at its lowest level since at least late 2011, while the decrease in U.S. government-related holdings kept the stake at its lowest level since last November.

On March 7, Gross tweeted that investors should "Sell what the Fed has been buying because they won't be buying them when Taper ends in October"

The Federal Reserve, in an effort to spur hiring and lower long-term borrowing costs, is now buying $55 billion in U.S. Treasuries and mortgage-backed securities each month. The Fed announced its latest cut to its monthly bond-buying program after a two-day meeting that ended March 19.

The Pimco Total Return Fund's asset allocation is important because Pimco manages roughly $1.9 trillion and is one of the world's largest bond managers. Pacific Investment Management Co is a unit of European financial services company Allianz SE (ALVG.DE: Quote).

Pimco said on its website that its holdings of U.S. government-related securities may include nominal and inflation-protected Treasuries, Treasury futures and options, and interest rate swaps.

The fund also increased its U.S. credit holdings to 10 percent in March from 9 percent the previous month, its non-U.S. developed market holdings to 10 percent from 9 percent in February, and its holdings of "other" securities to 5 percent from 4 percent in February.   Continued...

 
The headquarters of investment firm PIMCO is shown in this photo taken in Newport Beach, California January 26, 2012. REUTERS/Lori Shepler