Pimco, Vanguard hit by U.S. government debt selloff

(Reuters) - It has been an ugly month for some major bond fund managers, including the reigning king of bonds, Bill Gross.

The sudden sell-off in Treasuries and government-guaranteed mortgage debt has taken a big bite out of the performance of the Pimco Total Return Fund, the world's largest bond fund, which Gross oversees.

As of May 30, Pimco Total Return, with about $293 billion in assets, was down 0.15 percent for the year, according to data collected by mutual fund tracking firm Morningstar. For the month of May, Pimco Total Return is down 1.9 percent.

The performance for the Pimco fund comes at a time when the yield on the 10-year Treasury has risen to 2.2 percent on Friday from 1.63 percent on May 1. Treasury yields have risen amid concerns that the U.S. Federal Reserve could reduce its monthly purchases of $85 billion in Treasuries and agency mortgage debt due to signs of an improving economy....

The selling in Treasuries and agency mortgage debt began soon after Federal Reserve Chairman Ben Bernanke told Congress on May 22 that the central bank could begin slowing its monthly purchases of securities. The Fed launched the bond-buying program last September to provide a jolt to the economy.

The Vanguard Total Bond Market Fund has had an even tougher time than Pimco Total Return. The fund, with $117 billion in assets, is down 0.82 percent for the year....
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Link:  http://www.reuters.com/article/2013/05/31/us-funds-investing-pimco-idUSBRE94U18S20130531