Pimco has increased exposure to US treasuries to the highest level for over two years in its $86 billion Total Return fund.
The Newport Beach-based asset manager increased exposure in the fund from 39.7% at the end of June to 45.6% at the end of July.
The strategy, which is overseen by Mark Kiesel, Mihir Worah and Scott Mather, remains underweight the front end of the US yield curve but this latest increase is the fund’s largest holding since May 2014.
At that time, focus on the treasury exposure in the fund, which was then overseen by Bill Gross, had been high given the fact he had famously sold out of $28 billion worth of treasury holdings in mid-2011.
While the fund has flirted with adding treasuries over the past two years, the latest position marks a significant increase from the more gradual building which has gone on from the start of the year. This saw the team increase exposure from 35.8% in April to 36.4% in May and then 39.7% in June.
US government-related debt is not the largest position in the fund, with mortgage-backed securities (MBS) proving the biggest exposure at 47.8%. This again proved a popular point of discussion under Gross’s tenure, with the now-Janus Capital manager having aggressively bought MBS debt in late 2011.
The Pimco Total Return fund returned 11.4% in US dollar terms over the three years to the end of July 2016.
This compares with a 13.2% rise by its Citywire-assigned benchmark, the Barclays US Aggregate Bond TR, over the same timeframe.