PIMCO's Gross snaps up mortgage-backed securities

PIMCO chief executive Bill Gross has increased exposure to mortgage-backed securities (MBS), widely blamed for the collapse of the US financial system in 2008 and the cause of the credit crunch, on his $242bn Total Return fund.

The bond specialist has increased exposure to the assets by 6% in just one month, bringing the total weighting to 38% as at the end of September. The move has been seen by some commentators as a sign of new appeal for this type of fixed interest security in anticipation of the Federal Reserve directing the next bout of quantitative easing into the asset class. MBS have been at the top of investors' dislikes after the burst of US property market in 2008, which resulted in the government taking over two major securitisation trusts, Fannie Mae and Freddie Mac. Gross has invested 6% of...