RanSquawk is reporting that according to "sources", PIMCO's total return fund may buy up to 10% in equity securities. We have not seen another confirmation yet on this very material development which, if true, will confirm that Bill Gross is starting to sound the retreat on rates (his deceptive de minimis purchase of $17 worth of closed-end mutual funds notwithstanding), and that PIMCO may soon become the most unique experiment in a fund transitioning from pure bonds to hybrid (or all out) equity.
Update from Street Insider:
Bill Gross' massive $250 billion PIMCO Total Return Fund may invest up to 10 percent of assets in equity-linked securities like preferred stocks, according to a regulatory filing. The fund won't invest in common stock.
Bloomberg first reported this news.
PIMCO may start investing in these equity securities as early as the second quarter of next year.
10 percent of the massive fund would equal about $25 billion.
And the full report from Bloomberg:
Bill Gross’s Pimco Total Return
Fund, the world’s largest mutual fund, is expanding its
investment policy so it may put as much as 10 percent of assets
in equity-linked securities.
Pimco said it may start investing in preferred stock and
equity-linked bonds as early as the second quarter of next year,
according to the filing today with the U.S. Securities and
Exchange Commission. The fund won’t invest in common stock, the
Newport Beach, California-based firm said.
The $250 billion Pimco Total Return Bond Fund has advanced
7.8 percent in the past five years, beating 98 percent of
similarly managed rivals over that period, Bloomberg data show.
Gross said in October that asset purchases by the Fed will
probably signify the end of the 30-year rally in bonds.