DOW JONES NEWSWIRES
Mortgage holdings made up the smallest percentage of Pacific
Investment Management Co.'s benchmark Total Return mutual fund in
May in nearly a year.
On a market-valued weighted basis, the $156.9 billion fund had
61% of its assets last month in mortgages, the same level as last
June. The percentage got as high as 86% in February as global
markets remained in turmoil. Fund manager Bill Gross loaded up on
mortgage-backed securities issued by federal agencies like Fannie
Mae (FNM) when they were beaten down late last year but have
rebounded in 2009.
On Feb. 24, fund manager Bill Gross wrote in his monthly letter
that investors should focus on areas which were to get government
support in the credit markets, such as agency mortgages. The
Federal Reserve has pledged buying up to $1.75 trillion in
mortgage-related debt to help free up the markets.
Pimco is expected to be one of a handful of firms who will
manage the U.S. government's public-private investment program,
meant to help banks get rid of their toxic debt.
Meanwhile, Total Return's holdings of government and
government-related assets - which include Tresuries along with
their futures and options, agency debt and interest-rate swaps -
dipped to 25% in May from 26% a month earlier. Investment-grade
corporate debt rose to 18% from 16%.
Through May 31 the fund was up 5.56%, strongly outperforming its
benchmark, the Barclays Capital U.S. Aggregate Index. The fund rose
4.8% last year, beating some 90% of its peers.
-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136;
kevin.kingsbury@dowjones.com