PIMCO's Gross raises Treasuries in flagship fund

Reuters

By Jennifer Ablan

NEW YORK (Reuters) - Bill Gross, the manager of the world's largest bond fund, slightly increased the funds' exposure to U.S. Treasuries and bulked up his stake in non-U.S. debt in June, according to PIMCO's website on Tuesday.

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Gross' $243 billion Total Return Fund <PTTRX.O> held 8.0 percent in U.S. Treasuries and Treasury-related securities as of the end of June 30, up from 5.0 percent as of the end of May.

The "Government Treasury" classification in Gross' flagship fund includes holdings of U.S. Treasury notes, bonds, futures and inflation-protected securities, Pacific Investment Management Co said.

The yield on the benchmark 10-year Treasury note fell to 2.91 percent on Tuesday, down 1.4 basis points from late Monday. It touched 2.82 percent in overseas trading earlier on Tuesday, which was the lowest level since early December.

In the May interview, Gross had said: "Treasury yields are currently yielding substantially less than historical averages when compared with inflation. Perhaps the only justification for a further rally would be weak economic growth or a future recession that substantially lowered inflation and inflationary expectations."

Gross also increased the fund's stake in non-U.S. debt in June for a second consecutive month to 13 percent from 10 percent.

As of June 30, Gross' Total Return fund held a negative 9.0 percent short position in the newly-created investment category referred to as swaps and "liquid rates," which includes U.S.-dollar-denominated interest-rate swaps, swaptions, options and other derivatives. That position was unchanged from May.

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