Bond King Bill Gross Buys His Own Funds

Posted May 25th 2010 2:40PM by Wade Hansen
Filed under: Mutual Funds, ETF Investing

If you are considering putting more of your money into bonds, you are not alone.

Putting his money where his mouth is, famous Pimco bond manager Bill Gross just invested $7 million in three of his own funds.

Gross recently bought a total of 1.1 million shares in the Pimco Corporate Opportunity Fund (PTY), the Pimco Income Strategy Fund (PFL) and the Pimco Income Strategy Fund II (PFN).

So what do these funds invest in?

The Pimco Corporate Opportunity Fund invests in corporate bonds rated in the lowest investment-grade category (Baa or BBB) and in the highest non-investment-grade category (Ba or BB). In other words, the fund invests in the worst non-junk bonds and the best junk bonds.

The Pimco Income Strategy Funds try to maximize current income by investing in slightly riskier, higher-yielding corporate debt instruments with floating interest rates.

All three of these funds have benefited from the widening yield spreads in the bond market that have been brought on by increasing volatility and uncertainty in the global financial markets. And with the troubles we are seeing in Europe, it looks like uncertainty -- and bond yields -- should remain high for quite some time.

Disclosure: I do not own any of the funds discussed above. Positions can change without notice.

Tags: bill gross, inthenews, pfl, pfn, pimco, pty