Looks like Bill Gross got what he wanted, and it worked out quite well for Pimco’s Total Return fund — $1.7bm.
Bail-out brings Pimco $1.7bn payday
By Deborah Brewster, Financial Times.
Excerpt: "The Bill Gross-managed Pimco Total Return fund reaped a $1.7bn (£964m) payday following the US government’s takeover of home loan groups Fannie Mae and Freddie Mac.
While shareholders in Fannie and Freddie suffered deep losses, the world’s biggest bond fund on Monday had its highest one-day rise against its benchmark index, benefiting from the huge bet made by Mr Gross on mortgage bonds issued by the agencies.
Over the past year, Mr Gross had made a shift out of US Treasuries and corporate bonds into agency bonds, betting that the government would support Fannie and Freddie.
"We had 69 per cent in mortgage debt this morning, we had continued to build the position . . . We felt confident that the Treasury would have to act," he told the Financial Times…
…Mr Gross said yesterday: "We’re still in the mode of buying the highest-quality securities." The recent success of the Total Return fund helped Pimco to be the only one of the 25 largest mutual fund managers to lift its assets under management in the year to date, according to Financial Research Corporation data to the end of July."
Full article here.
