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Hooray! Bond Fund Loses $1.4B In December

From a quietly rejoicing Reuters:

Gross’s bond fund bleeds $1.4 billion in December: Morningstar

(Reuters) – The PIMCO Total Return Fund, the world’s largest bond fund, had $1.4 billion in outflows in December, according to fund analytics firm Morningstar.

The fund, operated by Bill Gross, co-chief investment officer of Pacific Investment Management Co, suffered total redemptions of $5 billion in 2011, a year in which the fund underperformed benchmarks after betting heavily against U.S. Treasuries, which rallied on the year.

The fund, which has about $244 billion in assets under management, has had investor redemptions on and off for more than a year. Morningstar estimates total redemptions have exceeded $13 billion since November 2010.

Still, December was kinder to Gross than the previous year. In December 2010, Morningstar estimates investors withdrew $6.7 billion from the fund, PIMCO’s flagship…

U.S. Treasuries were the best-performing bond class in 2011 by a wide margin. The benchmark 10-year Treasuries returned nearly 17 percent in 2011, the largest gain for the U.S. bonds since 2008

Thanks to the Federal Reserve and the problems in Europe.

Gross is moving to reclaim his past success by ramping up his purchase of mortgage-backed securities. The self-styled "bond king," analysts say, is betting on the likelihood the Federal Reserve will also purchase those securities in a bid to boost the U.S. housing market.

In other words, Mr. Gross expects the Federal Reserve to keep on propping up the bond market.

In any case, this should cause rejoicing among the Occupy Wall Street crowd.

After all, Mr. Soros is still making out like a bandit. In fact, exactly like a bandit.

This article was posted by Steve on Wednesday, January 4th, 2012. Comments are currently closed.

2 Responses to “Hooray! Bond Fund Loses $1.4B In December”

  1. River0 says:

    Outflows of $5 billion in 2011 and $6.7 billion in 2010 are tiny compared to the total fund amount of $244 billion under management; less than 5%. The Pimco bet against Treasuries was very rational considering the Moody’s downgrade threat and our out-of-control federal deficit and debt.

    This is just more abundant evidence that people at Reuters are financially illiterate – as all ‘progressives’ are.

    The American dollar is overvalued largely because so many other currencies are in worse shape. Precious metals and commodities are the only safe bet in this environment. If economies should take off, commodities will increase in value. If they don’t, and every world government has to print a lot more paper money, inflation will cause commodities to soar. Then Pimco will have been proven correct. They were just way early.

  2. proreason says:

    There are numerous publicly traded stocks that are dabbling in mortgage backed securities that have been paying dividends of 15% or higher for the last three years. Look at IVR as an example. Then look at competitors (Yahoo, and most financial sites provide links to competitors and / or stocks that people who are looking at IVR have looked at, most of whom will be competitors).

    The politically connected always make their money.

    You can gamble that those dividends will continue and make some good money if you get lucky. Of course, when the bottom falls out of that market, you will lose your entire investment, which could be in a couple of years, or could be tomorrow. Rest assured that the people who run the legal scam will get out at the right time, and that the odds of you doing so are one in a thousand. When the connected bail, the gig will be up in 15 minutes.

    CD’s are paying about 4/10th of a percent, which reduces the monthly income of many seniors to their $1,000 to $2,000 SS checks.

    The amazing untold story of the marxists’ economic crisis is that it didn’t just steal 50% of the life savings of seniors, it made it impossible to make any interest on the remainder. That has cost people who worked for 40 years trillions of dollars and plunged millions into poverty. You never hear a single word about it.

    But I’m sure Romney will educate the public about this issue.

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