By Sam Forgione
NEW YORK Nov 12 The Pimco Total Return Fund,
the world's largest bond fund, increased its holdings of
Treasuries and other U.S. government-related securities in
October as the Federal Reserve maintained its bond-buying
program, data from the firm's website showed on Tuesday.
The fund, which has $248 billion in assets and is run by
Pimco co-founder and co-chief investment officer Bill Gross,
increased those holdings to 37 percent in October from 35
percent in September.
That marked the biggest exposure to the securities since
July and came as the Fed announced that it would maintain its
$85 billion in monthly purchases of Treasuries and agency
mortgages. The Fed's decision on Oct. 30 boosted prices on
Treasuries and other bonds.
The Barclays U.S. Treasury Index rose 0.5 percent in October
after recovering 0.7 percent in September. The Pimco fund rose
0.93 percent last month, notching its second straight month of
The gain in October was lower than in September when the
fund rose 1.8 percent after the Fed surprised investors by
maintaining its stimulus, notching its best month since January
Pimco said on its website that its holdings of U.S.
government-related securities may include nominal and
inflation-protected Treasuries, Treasury futures and options,
and interest rate swaps.
The holdings of Gross's fund are important because Pimco
manages roughly $1.97 trillion and is one of the world's largest
bond managers. Gross's, and co-chief investment officer and
chief executive Mohamed El-Erian's, views on global credit also
influence other investors.
The Pimco Total Return Fund is the flagship of the Newport
Beach, California-based Pacific Investment Management Co, which
is a unit of European financial services company Allianz SE
While the fund likely benefited from its increased exposure
to U.S. government securities in October, it slightly decreased
its exposure to mortgages to 34 percent from 35 percent in
September during a modest rally in mortgage bond prices.
The fund's exposure to mortgages in October marked the
smallest allocation to the securities since May even as the
Barclays U.S. Mortgage-Backed Securities Index rose 0.7 percent.
The fund also increased its stake in U.S. credit to 10
percent from 9 percent in September as prices on U.S. corporate
bonds continued to rise. The benchmark Barclays Aggregate Bond
Index rose 0.81 percent in October after rising 0.95 percent in
The firm said that its U.S. credit holdings may include both
high-yield and investment-grade securities.
The fund decreased its exposure to money market and net cash
equivalents to 4 percent in October from 6 percent. Pimco
defines money market and net cash equivalents as liquid
investment grade securities with durations of less than one
The fund's exposures to non-U.S. developed market
securities, emerging market securities, and other securities
were unchanged last month. Its non-U.S. developed market
exposure remained at 4 percent, emerging markets at 6 percent,
and other at 5 percent.
Pimco said that "other" securities may include municipals,
convertibles, preferreds, and yankee bonds.
While Gross's fund earned its second straight month of
positive returns in October after declines during a rough summer
period, it remains down 1.45 percent this year, beating just 56
percent of peers, according to Morningstar.
Investors pulled $4.4 billion from the fund in October,
marking its sixth straight month of withdrawals in response to
the fund's performance dip this year and stripping the fund of
its title as world's largest mutual fund, according to
That title now belongs to the $251.1 billion Vanguard Total
Stock Market Index, which is up 27.23 percent this
year, beating 66 percent of peers, Morningstar data show.