Bill Gross put $ 17 million of his own wealth in bond funds closed last week

Bill Gross, head of the largest investment funds in the world, put $ 17 million of his own wealth in bond funds closed last week as a debt settlement prompted investors to flee the fund fixed-income liabilities first time in two years.

Gross, who manages the return of $ 250 000 000 000 Total Fund Pimco, bought five closed corporate bond funds this week after the purchase of five municipal bond funds last week, according to documents filed with the Securities and Exchange Commission U.S..

Purchases suggest is the gross value of the debt, even after investors withdrew money from taxable bond mutual funds for the first time since December 2008. A selloff in bonds has raised the yield on the benchmark 10-year Treasury more than one percentage point since November 4, the day after the Federal Reserve agreed to buy $ 600 billion in assets to address revive the economy. U.S. investors poured 252 billion U.S. dollars in passive funds in the first 11 months of the year.

"The question is whether it is a bond market turning point," said Eric Jacobson, an analyst at Morningstar Inc. in Chicago background, in a telephone interview.

Gross, who reduced their holdings of public debt funds for four consecutive months, said in October that the purchases of assets from the Fed will probably mean the end of the 30-year career in bonds. The yield on the 10-year bond yesterday touched a maximum of seven months in the evidence that the economy is recovering, encouraging investors to unwind bets on the securities will increase. Bond yields and prices move in the opposite direction.

Investors pulled $ 401,000,000 of taxable bond funds in the week ended Dec. 8, the first net redemptions from the week ended December 10, 2008, according to data released yesterday by the Investment Company Institute, a trade group based in Washington for the mutual funds industry.

$ 1.7 billion Retired

All bond mutual funds lost $ 1.7 billion to withdrawals of the week. Investors pulled $ 2,700,000,000 of domestic stock funds, the number 32 consecutive weeks of repayments, while equity funds that invest outside the U.S. attracted $ 1.3 billion, the ICI said.

Pimco's Gross bought shares Strategy Income Fund, Pimco Income Strategy Fund II, Pimco High Income Fund, Pimco Corporate Fund and Pimco Corporate Opportunity Fund on December 14, according to a filing yesterday by the SEC. On December 13 and 14, more than doubled their fund shares to 2.37 million shares, filings show.

Mark Porterfield, a spokesman for Pacific Investment Management Co. in Newport Beach, California, that is, the Pimco funds, declined comment.

closed-end funds issue a fixed number of shares that trade on an exchange.

Slump 8.9%

The shares of Pimco Municipal Income Fund III, have declined by 8.9 percent in price since Nov. 4. The stock trades at about a 18 percent premium to the value of its underlying assets.

Pimco Corporate Income Fund has fallen 7.5 percent since the plan of quantitative easing by the Fed was announced. The share of trade to less than 1 percent discount to NAV.

Gross, 66, has beaten 98 percent of their peers in the last five years overseeing Pimco Total Return. The fund lost 2.4 percent, including reinvested interest in the month ended Dec. 14. He had his first retirement of the investors in two years in November.

Pimco, a unit of Munich-based insurer Allianz SE, manages about $ 1.2 billion in assets.

Inflation expectations

Treasury Bond benchmark 10-year have slumped as signs of economic recovery and asset purchases planned by the Fed fueled expectations inflation will accelerate.

Investors began pulling out of municipal bond funds in November amid renewed concerns about inflation and a flood of supply of issuers. Withdrawals from municipal bond funds in the week ended Nov. 17 were $ 3 billion, according to Lipper IMF, the highest amount in nearly 19 years.

High performance managers including Mark Fidelity Investments' Boston Notkin and Margaret Patel in San Francisco, Wells Fargo & Co. said last month that they believe the rally is over and bond fund shares represent a better buy.