Gross claws back from bottom after October risk rally

The world's biggest bond investor Bill Gross has regained his top spot amongst his peers as investors piled back in to riskier assets.

Gross' $244m Pimco Total Return fund rose 1.7% over the past month, beating 93% of rivals and accounting for half of the fund's 3.6% overall return so far this year, according to Bloomberg data.

Investors have been concerned the previously top-performing manager had lost his touch after a particularly bad year, most recently missing out on the largest quarterly rally in treasuries since 2008.

But Gross's fund has received a boost from a rebound in riskier assets such as corporate credit and non-US holdings.

His fund invests 21% in corporate debt and 33% in securities outside the US. The manager also favours inflation-linked bonds that rise with expectations for higher consumer prices.

Gross reassured clients last month that expectations of gradually higher inflation have favoured TIPS versus nominal treasuries and corporate/financial bonds. The Bank of England's announcement of QE2 has also boosted UK holdings, said the manager.

In a letter to clients last month entitled "Mea Culpa", Gross admitted he had misjudged the extent of the economic slowdown and "had too little risk off and too much risk on".

After scrapping treasuries from his fund in February he gradually rebuilt his position in US government debt to 16% at the end of September.