Wednesday, June 12, 2013

Pimco Total Return Fund Cuts Treasury Holdings

Some very smart bond guys continue to lighten up on bond positions.

Investment management firm Pimco cut its holdings of Treasurys in its Total Return Fund by 2% in May, according to disclosures on the company's website.

 The $285 billion fund, run by Bill Gross, reduced Treasury holdings to 37% of its portfolio at the end of May, from 39% at the end of April.

The fund also cut its holdings of investment-grade credit, non-U.S. developed markets credit, emerging markets debt, and municipal debt. Money market and cash equivalents had been negative 8% of the portfolio, but increased to 0%.

Cash equivalents are the place to be. I have been moving in this direction at the EPJ Daily Alert for weeks. Money supply growth is slowing, which will not be good for equities and the bond market is likely at the start  of a multi-year downtrend.

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