William Gross, who runs the world's biggest bond fund at Pacific Investment Management Co. LLC, reduced holdings of government-related debt to the lowest level since July 2009 and added mortgage-related assets in October.
The $256 billion Total Return Fund's investment in government-related securities fell to 28% of assets from 33% the previous month, according to data published Nov. 15 on the website of the Newport Beach, Calif., company. The fund boosted mortgage assets to 39%, the highest level since July 2009, from 28%. PIMCO doesn't comment directly on monthly changes in its portfolio holdings.
Mr. Gross, who reduced holdings of government debt for a fourth month, said in October that asset purchases by the Federal Reserve will probably signify the end of the 30-year rally in bonds. Treasuries completed their steepest two-day decline since January 2009 on Nov. 15 after a group of economists and former government officials warned the central bank's plan to snap up $600 billion of government debt through June will lead to higher prices in the economy.
“The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment,” the group wrote in a note to be published this week in the Wall Street Journal and the New York Times.
John Taylor, the Stanford University professor who created a monetary-policy formula used by the Fed, is among the group of 23 who signed the open letter to central bank Chairman Ben S. Bernanke. The Fed is scheduled to buy Treasuries every day this week under the program.