Bill Gross Eliminates Government Debt From Pimco's Flagship Total Return Fund

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Gross Eliminates Government Debt From Pimco’s Flagship Total Return Fund
By Susanne Walker - Mar 9, 2011 11:09 AM PT

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., eliminated government-related debt from his flagship fund last month as the U.S. projected record budget deficits.

Pimco’s $237 billion Total Return Fund last held zero government-related debt in January 2009. Gross had cut the holdings to 12 percent of assets in January, according to the Newport Beach, California-based company’s website. The fund’s net cash-and-equivalent position surged from 5 percent to 23 percent in February, the highest since May 2008.
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reply to post by dbriefed


I have $15,000 invested in Pimco and pray it makes money. I am a very small time invester through my retirement and wonder if this announcement is good or bad news.

The basis for Gross pulling out of Government bonds completely is that he doesn't feel there will be a QE3. The market is riding on an artificial wave of QE2 credit.

IMHO, QE3 would cause further inflation and global instability. I suspect the Fed and global government entities know this. QE3 would cause an even greater deficit, and raise the cost of financing debt interest.

No QE3 means a stronger dollar. If this is true then there should be a long term decline in values of stocks and commodities.