PIMCO's $237 billion Total Return Fund sold all its U.S. government bond holdings last month, according to the money manager's website.
The portion of the fund in Treasuries and U.S. government-related paper was at zero as of Feb. 28, from 12% a month before. Mortgage-related holdings, meanwhile, dropped to 34% from 42%, while net cash and equivalents surged to 23% from 5%.
That positioning could reflect what Bill Gross, PIMCO co-chief investment officer, in his March investment outlook predicts will be a moment of truth for the market at midyear — when a huge wave of artificial government support begins to recede, and the success or failure of the federal government's bet that aggressive fiscal and monetary policy stimulus would prove capable of jump-starting private demand will be determined.
Although a seller in February, he wouldn't rule out PIMCO being a buyer of U.S. Treasuries when the quantitative easing policy ends.