Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., reduced its holdings of government-related debt to the lowest level since January 2009 while saying low yields cheat investors.
Mr. Gross cut the proportion of U.S. government and related securities in PIMCO's $239 billion Total Return Fund to 12% of assets in January from 22% in December, according to the firm's website. He increased the percentage of cash equivalent holdings to 5%, the highest since April.
Policymakers are robbing savers by driving down real interest rates as they keep borrowing costs at record lows in a “devil's bargain,” Mr. Gross wrote in his monthly investment commentary on Feb. 2. He advised investors to reduce holdings of Treasuries and U.K. gilts and buy higher-returning securities such as debt from emerging market nations.
“Old-fashioned gilts and Treasury bonds may need to be 'exorcised' from model portfolios and replaced with more attractive alternatives both from a risk and a reward standpoint,” Mr. Gross wrote in the column.
PIMCO doesn't comment directly on monthly changes in its portfolio holdings.
Mr. Gross kept the holdings of non-U.S. developed debt and emerging markets debt steady at 4% and 9%, respectively, in January. He trimmed holdings of mortgage securities three percentage points to 42% in December.
PIMCO, a unit of Allianz SE, managed $1.24 trillion of assets as of December.