NEW YORK (CNNMoney) -- Pimco's Total Return Fund (PTTRX), the world's biggest bond fund, slashed its exposure to U.S. government debt to zero last month.
It's the second month in a row that well-known fund manager Bill Gross has drastically reduced Pimco's exposure to U.S. government debt.
Gross has been very vocal about his feelings toward U.S. interest rates, saying in January that they were "robbing" investors and that U.S. government debt should be "exorcized" from investors' portfolios.
The Total Return Fund held about 22% of its holdings in U.S. government debt as recently as December, but reduced those holdings to about 12% in January.
Pimco defines U.S. government-related securities as not only U.S. Treasuries but also government agency debt, interest rate swaps, futures and options and FDIC-guaranteed corporate securities.
Gross's comments typically carry considerable influence on investors because his Total Return Fund is by far the world's largest bond fund with more than $240 billion in assets under management. It's also the best-performing bond fund for the last 15 years, according to Morningstar.com.
In his February newsletter, Gross said he believes U.S. Treasuries are trading at a yield of 1.5 percentage points below where they should be historically, making them an unattractive place to invest for the time being. Gross also reiterated that stocks and bonds may struggle this summer when the Federal Reserve ends its second quantitative easing program.
"Yields may have to go higher, maybe even much higher to attract buying interest," Gross wrote.
At the same time that he reduced his exposure to U.S. government debt, Gross vastly increased his cash and cash-equivalent position last month. Cash now makes up 23% of the portfolio compared to the 5% of the portfolio the fund had in January. The fund also increased its holdings of overseas emerging market bonds to 10% of its assets, up from 5%.
The Total Return Fund also reduced its exposure to mortgage-backed securities to 34% of the portfolio, down from 42% of the portfolio in January.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||4.09%||4.03%|
|15 yr fixed||3.25%||3.18%|
|30 yr refi||4.12%||4.07%|
|15 yr refi||3.29%||3.19%|
Today's featured rates:
Shares of several uranium miners are soaring this year on hopes that Donald Trump will commit more investments to nuclear power. But investors need to get careful. The stocks are as volatile as radioactive elements. More
President Trump promised to 'buy American and hire American.' He says his policies will create 25 million new jobs, the most of any U.S. president in history. CNNMoney lays out just how hard that will be. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
If you're smart about when you first claim Social Security, you can increase your benefits and reap the rewards for the rest of your life. More