(Bloomberg News) Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co., increased holdings of U.S. government debt to the highest in 13 months on concern risks to the global economy are rising.

Gross boosted the proportion of U.S. government and Treasury debt in the $244 billion Total Return Fund to 30 percent of assets in December, the highest since November 2010, according to a report placed on the company's website today. The allocation was 23 percent in November. Newport Beach, California-based Pimco doesn't comment directly on monthly changes in its portfolio holdings.

Last week, Gross backed away from Pimco's "new normal" outlook after lagging behind the majority of his peers during the biggest bond-market rally in nine years. The period of muted growth in developed economies, high unemployment and "relatively orderly" deleveraging that Mohamed El-Erian, who shares the title of chief investment officer with Gross, coined in the aftermath of the 2008 financial crisis is morphing into a world of credit and zero-bound interest-rate risk, Gross wrote in his monthly investment commentary released Jan. 4.

"There is potential for a paranormal, a bi-model world" Gross said during a Jan. 6 radio interview on "Bloomberg Surveillance," referring to statistical models that signal about equal probability of different outcomes. The two worlds are one "of deflation and one of re-flation."

Pimco has been advising investors to buy U.S. Treasuries, long-term inflation-indexed U.S. debt, "high-quality" corporates, senior bank debt and municipal securities. The recommendations are a departure from Gross's call last year, when he advised buying emerging-market debt and cautioned investors to stay away from the U.S., noting that growth would be higher in developing economies, while excessive borrowing would lead to inflation.

Gross eliminated his holdings of Treasuries in February and had a net bet against the securities in the Total Return Fund, missing the biggest rally in Treasuries since 2008. Gross issued a "mea culpa" to investors in October and boosted the debt to 23 percent of the portfolio by the end of November.

Treasuries returned 9.8 percent in 2011, while bonds worldwide returned 5.9 percent last year, according to Bank of America Merrill Lynch's Global Broad Market Index. That was the biggest increase since a gain of 8.9 percent in 2002.

Gross's fund has returned 4.53 percent in the past year, beating 34 percent of its peers, according to data compiled by Bloomberg. It gained 1.6 percent over the past month, beating 98 percent of peers.

Gross increased its holdings of mortgage securities in December to 48 percent, the highest since June 2009. The fund held 43 percent in November.

Pimco kept holdings of emerging-market debt at 10 percent and cut the bonds of non-U.S. developed nations to 18 percent from 20 percent in November.