Reuters reports that Bill Gross, manager of the world's largest bond fund, ramped up buying of mortgage-backed securities in September on the likelihood the Federal Reserve's reinvestment program in those securities will boost prices significantly.
Gross increased mortgage debt to 38 percent of assets in his $242 billion PIMCO Total Return Fund in September, from 32 percent in August, as the U.S. central bank announced last month that it "will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities."
PIMCO's latest bet on mortgages isn't going unnoticed. His move into mortgage-backed securities comes as the PIMCO Total Return fund's cash equivalents and money-market securities fell to negative 19 percent September, from negative 9 percent in August…
Read the rest of the story at http://www.reuters.com/article/2011/10/12/us-pimco-gross-mortgages-idUSTRE79B7SM20111012
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