Bill Gross, American financial manager, investment author, and head of PIMCO’s $252.2 billion Total Return Fund, has taken a sizable position in Mexican government bonds. The ETF version of the the PIMCO Total Return Fund (BOND) has an incredible 10.34% of its market value in Mexican Bonds. That is second only to US Bonds in terms of position sizing. Even more interesting, the average duration of his Mexican Bond holdings is similar to the fund’s holdings in US Bonds, around 5 years.
Why would Bill Gross be interested in Mexico?
- Mexico has a debt to GDP ratio of 45% which is quite low when looked at in comparison to countries like the US (at 100% debt to GDP) and Japan (at 200% debt to GDP).
- Mexico’s Central Bank is very focused on fighting inflation which is a long-term positive for the currency and its debt. The central bank lending rate has stood at 4.5% for several years.
- Mexico’s economy continues to show good growth, in the 4 to 5% range.
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