PIMCO’s Bill Gross, who is also known as the “King of Bonds,” continued to acquire high-quality mortgage-backed securities through September, while dumping U.S. government debt. The Wall Street Journal’s Min Zeng wrote yesterday:

High-quality mortgage-backed securities remain the investment of choice in the eyes of bond-fund giant Pacific Investment Management Co.

Pimco Total Return Fund, the world’s largest bond-focused mutual fund, raised its holdings of mortgage-backed securities to 79% by the end of September, a level not seen since at least June 2000, from 69% a month earlier, according to data from the company’s Web site.

In contrast, Pimco continued to snub U.S. government debt, reducing its holdings for the ninth straight month, even though Treasurys have benefited over the past couple of months from massive safe-haven buying.

Pimco spokesman Mark Porterfield said Monday the company doesn’t comment on its bond holdings. Bill Gross, Pimco’s co-chief investment officer and manager of the $129.59 billion Total Return Fund, didn’t immediately respond to an email seeking comments on the holdings.

Source:

“Pimco Bets on Mortgage-Backed Debt”
Min Zeng
Wall Street Journal, October 21, 2008

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