(Bloomberg News) Bill Gross, the co-chief investment officer of Pacific Investment Management Co., spent $4.4 million of his own money this month to purchase shares of five municipal-bond funds run by his firm after tax-exempt debt tumbled.

Gross, 66, who manages the world's biggest bond fund at Pimco, has more than doubled his holdings of the firm's closed-end municipal bond funds, according to Securities and Exchange Commission data. He bought about 451,000 shares of Pimco municipal bond funds in December, bringing his total holdings to about 878,000 shares.

The municipal bond market has dropped in the past two months due to a jump in new bond issuance and rising Treasury rates. Tax-free holdings lost 2.29% in November, the third consecutive monthly slide and the longest since 2004, according to the Bank of America Merrill Lynch Municipal Master Index, which accounts for price changes and interest income.

"Bill Gross's leadership in being a buyer is notable as it reflects his optimism about a recovery in the underlying fundamentals of municipal bonds," said Cecilia Gondor, an analyst at Thomas J. Herzfeld Advisors Inc. in Miami, in a telephone interview.

Gross added to shares in Pimco California Municipal Income Fund, Pimco California Municipal Income Fund II, Pimco California Municipal Income Fund III, Pimco Municipal Income Fund and Pimco Municipal Income Fund III on Dec. 9 and Dec. 10, according to SEC filings.

He bought 50,000 shares of the Pimco Municipal Income Fund III on Dec. 10 at an average price of $9.75, according to public records. That fund hit a 52-week high of $12 on Sept. 8.

Closed-end funds issue a fixed amount of shares that trade on an exchange. The average discount between the share prices of municipal bond closed-end funds and the value of the underlying assets owned by the funds has risen from 0.05% at the end of November to 3.4% on Dec. 10, Gondor said.

Gross runs the $250 billion Pimco Total Return Fund. It has advanced 7.7% this year, doing better than 71% of similarly managed funds, according to data compiled by Bloomberg. Over the past five years, the fund has advanced 8.1%, beating 98% of peers.

Gross wasn't available for comment, Mark Porterfield, a spokesman for Newport Beach, California-based Pimco, said in an e-mail response.