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Pimco Total Return Fund

Pimco Total Return Fund - PIMCO's Total Return Fund, the world's biggest bond portfolio, raised holdings of mortgage-related assets in October to the highest level since July 2009 and continued to shun government-related securities including Treasuries and interest-rate swaps.

The $256 billion Total Return Fund, run by Bill Gross, boosted mortgage assets to 39 percent last month from 28 percent the previous month, while government-related securities stood at 28 percent last month, down from 33 percent in September, PIMCO's website showed.

Gross' latest monthly investment outlook provides a glimpse into the firm's asset-allocation strategy. In late October, Gross told clients in his investment piece that he favored U.S. agency mortgages because they were yielding 200 basis points "more than those 1 percent Treasuries."

Pimco Total Return Fund

Gross, who also helps oversee more than $1.1 trillion with co-chief investment officer Mohamed El-Erian, said that the resumption of asset purchases by the Federal Reserve would squelch the Treasury bond market.

"The Fed's announcement will likely signify the end of a great 30-year bull market in bonds and the necessity for bond managers and, yes, equity managers to adjust to a new environment," he said. The U.S. central bank's bond asset purchasing program "is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme," Gross added.

In early November, the Fed did announce that it would buy $850 billion in Treasuries by the middle of 2011.

Pimco Total Return Fund
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