PIMCO’s Gross Lowers U.S. Debt Holding

According to a report by Bloomberg, PIMCO’s Bill Gross, who manages the world’s biggest bond fund, has reduced holdings of U.S. Government-related debt, while increasing his holding of emerging market debt the most since 2008. According to a report on the Newport Beach, California-based PIMCO’s website, Gross has reduced the proportion of U.S. government and related securities in total fund to 33% of total assets in March from 35% of total assets in February. In the same period, he has raised his holding of emerging market debt from 5 % to 6%. He has also cut his holdings of other developed nations' debt to 18%, the first cut in holdings since October.

In an interview to Bloomberg radio on March 25, Gross said that emerging and developing nations are now “debtor countries” witnessing a strong growth and developed nations are “creditor countries” undergoing a weaker growth phase. “Bonds have seen their best days,” he added. Gross said that as there have been excessive borrowings in U.S., U.K. and Japan, which would lead to inflation. Hence, almost three decades of bond market rally may be edging towards to a close.

PIMCO also favors currencies of China, Australia, Brazil and Canada. They offer attractive returns amid an uneven global economic recovery, according to fund manager Paul McCulley. The fund reduced its mortgage bond holdings to 16 % in March from 17% in February and raised net cash from 2 % to 5%. However, its holdings of investment grade corporate bonds stood unchanged at 16 %.

According to data compiled by Bloomberg, Gross’s $219.7 billion total return fund handed investors a gain of 15 % in the past year. The return has been better than 52 % of its competitors. This year so far, the fund’s return has been 3.2 %, beating 77 % of its competitors. According to company’s spokesman Mark Porterfield, PIMCO a unit of Munich based insurer Allianz SE, does not comment on monthly changes on their portfolio holdings.