Pimco Cuts Government Debt, Boosts Emerging Markets

Bill Gross, co-chief investment officer of Pacific Investment Management Co., speaks at the Morningstar Investment Conference luncheon in Chicago. Photographer: Tim Boyle/Bloomberg News

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., reduced holdings of U.S. government-related debt in July as yields tumbled.

The company’s $239.3 billion Total Return Fund’s investment in the debt was cut to 54 percent of assets last month, from 63 percent in June, according to the website of Newport Beach, California-based Pimco. The share of emerging-market debt increased to a record 11 percent, from 10 percent. The fund also boosted mortgage debt to 18 percent, the most since September.

The fund has returned 12.8 percent in the past 12 months, beating 70 percent of its peers, according to data compiled by Bloomberg. It gained 1.95 percent over the past month, a performance superior to 78 percent of competitors. Pimco, a unit of the Munich-based insurer Allianz SE, managed $1.1 trillion of assets as of June 30.

Pimco’s U.S. government-related debt category can include conventional and inflation-linked Treasuries, agency debt, interest-rate derivatives, Treasury futures and options and bank debt backed by the Federal Deposit Insurance Corp., according to the firm’s website.