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Bill Gross Recent Decision
Old 03-10-2011, 07:50 PM   #1
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Bill Gross Recent Decision

Looks like Bill Gross (Pimco) does not want to have large positions of U.S. Treasuries in their portfolios (including Total Return).

Here is the link to the article:

Pimco
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Old 03-10-2011, 10:03 PM   #2
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I pay attention to what Gross and his partner say, and my Bond AA is at an historic low (15%). I am curious does anybody know how Gross would view GNMA's are they considered US treasuries or something else?
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Old 03-10-2011, 11:35 PM   #3
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Quote:
Originally Posted by clifp View Post
I pay attention to what Gross and his partner say, and my Bond AA is at an historic low (15%). I am curious does anybody know how Gross would view GNMA's are they considered US treasuries or something else?
However Gross would see it, GNMAs have all the problems of treasuries (if he is correct and there are problems to be expected), but also some of their own- like duration that tends to increase as rates rise.

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Old 03-10-2011, 11:53 PM   #4
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The thing with Bill Gross is that he changes his mind very quickly and only tells you about it well after the fact. Last year IIRC, he appeared on CNBC saying that he had drastically reduced the treasury position in his fund because he had become bearish on treasuries. But a few months later, more than half of the Total Return fund was once again invested in treasuries. If you trust Bill Gross' opinion, it is probably best to invest in his fund and let him work his magic rather than try to DIY based on his advice.
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Old 03-11-2011, 12:07 AM   #5
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gnma are not treasuries, look at the difference in yields. gnma do have the full faith and credit of the treasury and the printing press so they are a good quality instrument. they have problems, that's why their yield is so much higher than a 10 yr treasury note. extension risk is a problem and with rates poised to rise gnma may not be good to hold.

gnma have done great over the past 10 years or more but we have been in a declining and then a steady rate environment and they do well in that situation. vanguard gnma fund is at near historic high level, the only reason they are down from the $11.10 area is due to dividends in december that dropped the nav by about 23 or 24 cents. i would caution against buying the fund now as it has a very high nav and interest rates are bound to rise sometime in the next year and certainly beyond that. now they were a great buy in early 2007!
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Old 03-11-2011, 12:17 AM   #6
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Like FD said, pay a lot of attention to what Bill Gross does, not what he says.
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