Bill Gross invests in muni bond funds

(BestGrowthStock) – Influential bond investor Bill Gross invested $5.5 million of his own money in five municipal bond funds run by his firm, Pacific Investment Management Co, to take advantage of the falling bond prices.

Gross, who helps oversee more than $1.1 trillion in assets at Pimco and runs the $252 billion Total Return Fund (PTTRX.O: ), bought 560,090 shares of Pimco municipal bond funds between December 9 and December 14, filings with the U.S. Securities and Exchange Commission showed.

U.S. municipal bonds prices have been tumbling for more than a month as investors worried that a flood of new tax-exempt debt sales this month will swamp longer-dated debt as Build America Bonds (BABs) exit the market.

Taxable and subsidized by the federal government, BABs were created in 2009 as part of the economic stimulus program and are a boon to states and other local governments battling tight finances.

But the popular temporary program is due to expire on December 31 and Congress appears increasingly unlikely to reauthorize BABs sales beyond the expiry date.

Prices of AAA-rated munis declined enough to lift yields by as much as 14 basis points, according to a preliminary reading of the market by Municipal Market Data.

Gross added 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, according to the filings.

(Reporting by Suzannah Benjamin and Anil D’Silva in Bangalore)

Bill Gross invests in muni bond funds