By Min Zeng
Bill Gross cut U.S. government-related debt holdings at the
Pimco Total Return Fund in July as bond prices pulled back.
U.S. government-related holdings accounted for 45% of the $223.1
billion bond fund at the end of last month, compared with 47% at
the end of June, according to data available late Monday afternoon
on Pacific Investment Management Co.'s website.
The holdings include Treasury bonds, Treasury
inflation-protected securities, Treasury futures and derivatives
linked to the U.S. government debt securities.
The Pimco fund, the world's largest bond fund by assets,
allocated 20% of its investments to mortgage-backed securities at
the end of July, compared with 22% from a month earlier.
Mr. Gross is co-founder and chief investment officer at Pimco,
which manages $1.97 trillion in global assets as part of Germany's
Allianz SE.
Treasury bond prices fell in July as demand for haven assets
dialed back. The Treasury bond market posted negative 0.16% in
total return--that includes price appreciation and interest
payments--last month, according to data from Barclays PLC.
Mr. Gross has said in recent months he favored Treasury bonds
with intermediate maturities.
Sixty-six percent of his bond fund's holdings are bonds maturing
between three year to 10 years at the end of July, according to
data from Pimco's website.
Mr. Gross last month raised the holdings in developed countries
other than the U.S., which include sovereign debt sold by euro-zone
countries and the U.K. and Canada. The share of the debt was 17% at
the end of July, compared to 16% in June.
Holdings of U.S. corporate bonds, including both
investment-grade debt and junk bonds, were 12% at the end of July,
unchanged from a month earlier.
Emerging-market holdings were 9% last month, the same as in
June.
Investors are keeping a close eye on Pimco funds' performances,
flows and asset allocations following a year of record redemption
and a recent management shake-up. Mohamed El-Erian abruptly quit as
Pimco's chief executive earlier this year amid tension with Mr.
Gross.
The Pimco fund received a negative total return of 0.52%,
reflecting price changes and interest payments, in July, according
to Morningstar.
That compares to a loss of 0.25% for the benchmark Barclays U.S.
Aggregate Bond Index, Morningstar said. The fund lagged behind 90%
of its peers for the period.
This year through Friday, the fund has posted a 3.79% return,
lower than a 4.2% return on the benchmark index. The fund's
performance trailed 72% of its peers.
Investors pulled $830 million from the Pimco fund in July,
according to Morningstar. It marks the 15th straight monthly
outflow, though the pace of net cash withdrawals dropped sharply
from a month ago.
Write to Min Zeng at min.zeng@wsj.com