Bill Gross, Pacific Investment Management Co.'s founder and co-chief investment officer and the manager of its $157 billion Total Return Fund, reduced his holdings of mortgage debt to the lowest level in a year.

Gross cut the holdings to 61% last month, from 64% in April, according to a Monday posting on the Newport Beach, Calif., company's Web site. He also reduced his holdings of government-related debt to 25% while boosting investment grade holdings to 18%.

Gross' holdings of mortgage debt reached as high as 86% in February, when he advised investors to "shake hands" with the government as it launched a program to purchase $500 billion of mortgage-backed bonds. (The program was later expanded to $1.25 trillion.)

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