Giant PIMCO income fund ups mortgage exposure after sell-off

The managers of PIMCO's $28bn income range have upped exposure to the US mortgage sector after May and June's sell-off.

Mortgage-backed securities have sold off since the Federal Reserve first hinted it may taper its bond buying programme earlier this year, with prices falling and coupons rising sharply following upwards moves in treasury yields. The Federal Reserve currently buys around $40bn a month of MBS as it seeks to keep a lid on yields, and any removal of this will have a profound effect on prices. However, following the recent sell-off, PIMCO's Dan Ivascyn and Alfred Murata have taken mortgage holdings in their $4.2bn Income fund to 55%, pointing to overselling from Real Estate Investment Trus...