The Pimco Total Return Fund has substantially added to its holdings of US government-related securities in December, Reuters revealed, citing data from the website of the world's biggest bond fund. The company increased its holdings even as continued selling pressure on the bonds was instrumental in the fund's largest yearly loss in almost two decades, the report said.
The data showed that the fund had increased US government related holdings from 37% in November to 45% in December. Pimco, managed by Co-Founder and Co-Chief Investment Officer Bill Gross, has $237 billion in assets.
Pimco's website showed that its US government related securities holdings may comprise nominal and inflation-protected Treasuries, Treasury futures and options and interest rate swaps, the report said. The increase represented the fund's largest exposure to the securities in seven months. It was in June last year when the company placed the "US government-related debt" category on its website.
According to the report, the asset allocation of Pimco is important since it is one of the biggest bond managers in the world, managing around $1.97 trillion. Based in Newport Beach, California, Pacific Investment Management Co or Pimco is a unit of Allianz SE, a European financial services firm.
Moreover, the fund also increased its mortgage holdings by 1%, from 34% in November to 35% in December, making the securities its second biggest holding. Its money market and net cash equivalents in December had a negative position of 6% after it posted a 5% exposure in November, the report said.
Money market and net cash equivalents as defined by Pimco refer to liquid investment grade securities that have a less than one year duration. Reuters reported that having a negative position in these securities is a sign of using derivatives and short-term securities as collateral to bolster its buying power with leverage.
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