Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., held holdings of Treasuries and mortgages steady in June after saying that U.S. securities are still the safest bet.
Gross kept the proportion of U.S. government and Treasury debt in his $263 billion Total Return Fund unchanged at 35 percent of assets last month, according to a report on the company’s website. Mortgages were at 52 percent for a second consecutive month. Pimco doesn’t comment directly on monthly changes in its portfolio holdings.
“Don’t underweight Uncle Sam in a debt crisis,” Gross wrote in his monthly investment outlook posted on the Newport Beach, California-based company’s website on June 28. “Money seeking a safe haven will find it in America’s deep and liquid, almost Aaa rated, bond and equity markets.”
Treasury 10-year note yields approached all-time lows today after the U.S. sold $21 billion of the securities at a record rate and minutes from the Federal Reserve’s last meeting showed some members favor more stimulus. The benchmark rate on everything from mortgages to corporate loans dropped as low as 1.45 percent. The record low of 1.4387 percent was set June 1.
The Total Return Fund cut its holdings of non-U.S. developed nations’ debt by 1 percent to 5 percent in June, the lowest since February 2011. Gross left emerging-market debt unchanged at 8 percent and kept investment-grade credit steady at 13 percent for the second straight month, the smallest ratio since March 2008. High-yield debt rose to 3 percent of holdings in June, versus 2 percent in May, which was the least since December 2009.
Pimco continues to avoid the debt of heavily indebted nations including Spain and Portugal in favor of U.S. Treasuries and mortgage securities, Gross, Pimco’s co-chief investment officer and founder, said June 29 in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.
Gross left the Total Return Fund’s net cash-and-equivalent position unchanged at negative 21 percent last month. The fund can have a so-called negative position by using derivatives, futures or by shorting.
Gross had boosted holdings of U.S. government and Treasury debt in May for the first time in four months. Treasuries returned 2.54 percent this year as of July 10, while mortgages returned 2.23 percent, according to Bank of America Merrill Lynch indexes.
The Total Return Fund attracted $1.4 billion in June, according to Chicago-based Morningstar Inc., as it outperformed its peers. The sixth straight month of net deposits contributed to $5.9 billion in new cash for the year through June 30, overcoming last year’s withdrawals of about $5 billion, Morningstar said July 2.
Pimco’s Total Return Fund gained 7.3 percent over the past year, beating 74 percent of its peers, according to data compiled by Bloomberg.
The fund’s government and Treasury debt category includes fund holdings of U.S. Treasury notes, bonds, futures and inflation-protected securities.
Pimco, a unit of the Munich-based insurer Allianz SE, managed $1.77 trillion of assets as of March 31.