The Spectators

NEWS - Financial Services

PIMCO ups US govt debt weighting

Published 3:25 AM, 17 Jul 2010 Last update 7:02 AM, 17 Jul 2010

By John Parry of Reuters
NEW YORK - PIMCO's $US234 billion Total Return Fund, the world's biggest bond fund, raised its market value weighting in US government debt to 63 per cent at the end of June from 51 per cent at the end of May, data on the company's website showed.
PIMCO, the world's biggest bond investment manager, overseeing over $US1 trillion in assets, also steeply raised the fund's weighting to government-related debt in May.
In mid-June, Mohamed El-Erian, who shares the title of PIMCO's co-chief investment officer with Bill Gross, told Reuters Insider television that PIMCO has been a buyer of Treasuries and government-related debt as a "short-term trade."
In June, US Treasury prices rallied, pushing the benchmark 10-year note's yield down from about 3.30 per cent to about 2.94 per cent, as investors took the view that the pace of US economic growth was decelerating.
Pacific Investment Management Co's government allocations refer not only to nominal Treasuries, but also TIPS, agencies, interest rate swaps, Treasury futures and options and FDIC-guaranteed corporate securities.
The allocation to these government securities is the highest since October 2009, according to the company.
The weighting to non-US dollar developed market bonds fell to 3 per cent in June from 6 per cent in May, according to PIMCO.
Investors' concerns about the European banking system and the highly indebted state of some European sovereigns have begun to abate since the middle of June.
The fund's emerging market debt weighting rose to 10 per cent in June from 9 per cent in May.
In cash equivalents, the fund had a negative 15 per cent weighting in June, versus a negative 4 per cent weighting in May, which is effectively a short position.

|

Related Industry Sectors

View the latest stories on Financial Services

Related People

View all stories on BILL GROSS

View all stories on JOHN PARRY

View all stories on MOHAMED EL-ERIAN

Comment

Be the first to comment on this story.

Contribute to the Conversation

To contribute your comments for possible publication, please Login or Register.

Preference will be given to succinct contributions. We may contact you via email prior to publication.