Pimco’s Home-Loan Wager Seen as Prescient on QE3 Odds: Mortgages
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Investors are positioning to benefit from a third round of debt purchases by the Federal Reserve, acquiring mortgage securities they’ll be able to sell to the central bank at higher prices.
Pacific Investment Management Co.’s Bill Gross raised mortgage holdings in the $258.7 billion Pimco Total Return Fund to 53 percent in April, the highest in three years, from 25 percent in July. A windfall would represent a repeat for the fund, which holds money ranging from individuals’ retirement accounts to institutional investments, following its outsized home-loan bets before the Fed acquired $1.25 trillion of mortgage bonds between January 2009 and March 2010.