Gross Trims Mortgage Holdings, Treasuries in Flagship Fund

PIMCO Bill Gross
Bill Gross, co-chief investment officer of Pacific Investment Management Co. Photographer: Andrew Harrer/Bloomberg

Bill Gross, who runs the world’s biggest bond fund, reduced his holdings of mortgages last month, its largest holding, while boosting government agency and non-U.S. developed market country debt.

Gross cut the proportion of U.S. government and Treasury debt at Pacific Investment Management Co.’s $285 billion Total Return Fund to 23 percent of assets last month, from 24 percent in October, according to a report on the Newport Beach, California-based company’s website. Mortgages remained the fund’s largest holding at 44 percent, down from 47 percent a month earlier. Pimco doesn’t comment directly on monthly changes in its portfolio holdings.

The Total Return Fund increased its holdings of non-U.S. developed nations’ debt to 12 percent in November, from 11 percent the month before. Gross kept the fund’s emerging-market debt at 8 percent, its municipal bonds holdings at 5 percent and its investment-grade credit at 11 percent.

High-yield debt fell to 2 percent, from 3 percent in October.

Treasuries have returned 2.7 percent in 2012, while mortgages returned 2.6 percent, according to Bank of America Merrill Lynch indexes. Treasuries comprised 31 percent of the portfolio in April and were increased to 35 percent during the next two months before Gross began reducing his stake.

The Total Return Fund gained 10.4 percent this year, beating 95 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 $1.92 trillion in assets as of Sept. 30.

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