By Min Zeng
Bill Gross cut U.S. government-related debt holdings at the
Pimco Total Return Fund in August while slightly raising exposure
to corporate bonds.
The move came as the U.S. bond market rallied broadly last
month. The yield on the benchmark 10-year Treaasury note fell to
the lowest level since June 2013, which encouraged investors to buy
higher-yielding, but riskier fixed-income assets such as corporate
bonds. Bond yields fall as prices rise.
U.S. government-related holdings accounted for 41% of the $221.6
billion bond fund at the end of last month, compared with 45% at
the end of July and 47% at the end of June, according to data on
Pacific Investment Management Co.'s website Wednesday
afternoon.
The holdings include Treasury bonds, Treasury
inflation-protected securities, Treasury futures and derivatives
linked to the U.S. government debt securities.
The Pimco fund, the world's largest bond fund by assets,
allocated 13% of its investments in U.S. corporate bonds, including
both investment-grade debt and bonds sold by lower-rated firms, or
junk bonds. That compared with 12% at the end of July.
The fund's holdings of mortgage-backed securities was 20%,
unchanged from the end of July.
Mr. Gross is co-founder and chief investment officer at Pimco,
which manages $1.97 trillion in global assets as part of Germany's
Allianz SE.
Treasury bonds posted a total return--reflecting price changes
and interest payments--of 1.06% in August, but the return was
outpaced by 1.59% from junk bonds, according to Barclays PLC.
Write to Min Zeng at min.zeng@wsj.com
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