The funds have high levels of short-term liquidity and have reduced their holdings of Treasuries that would be most immediately affected by the failure of the U.S. to extend its borrowing capacity, the ratings company said yesterday in a report.
“We have avoided maturities in the time period toward the end of October,” Nancy Prior, head of money funds at Boston- based Fidelity Investments, said in an interview. Fidelity is the largest manager of U.S. money funds with $427 billion in assets as of Aug. 31, according to Crane Data LLC in Westborough, Massachusetts.
Gross Buying
As Fidelity has sought to avoid Treasury bills maturing near the deadline, Pacific Investment Management Co. has been buying them as their yields have risen, said co-chief investment officer Bill Gross, manager of the world’s largest bond fund at Pacific Management Investment Co.
“Their selling begets opportunistic buying on the part of Pimco,” Gross said in an interview on Bloomberg Television. “We’re picking up pennies on the street. This is a particular penny that we think is risk-free.”
Hong Kong’s futures and options market operator, Hong Kong Exchanges & Clearing Ltd., increased the discount on Treasury bills used as collateral for margin requirements today, citing concern that the U.S. is at risk of a default.
In Japan, investors sold 2.2 trillion yen ($22.5 billion) of foreign bonds in the week ended Oct. 4, the most on record, according to figures released by the Ministry of Finance in Tokyo. The report didn’t reveal the amount of Treasuries sold by the Japanese bondholders.
Equities Collars
For Mark Luschini, chief investment strategist for Janney Montgomery Scott LLC in Philadelphia, the dip in stock prices may become a chance to increase his ownership of U.S. equities.
“Where we are holding significant cash we have been nibbling,” Luschini said in an e-mail response to questions on Oct. 9. He added to his equity positions as the S&P 500 fell to 1,660 and “we will buy more aggressively if we near 1,600, all things being equal.”