The actively managed
PIMCO Monthly Income Fund is a global bond fund with a decided focus on income generation, paying
attention to protecting invested capital. The managers have a lot of tools
at their disposal and can invest in a wide range of fixed-income
securities, including mortgage backed securities, investment grade bonds,
high yield debt, and emerging market bonds. Since inception in 2011, the
fund has garnered three annual FundGrade A+® Awards and
currently maintains a
FundGrade™ A Grade
for July. Here’s a look at what makes this fund a standout.
At the end of June, government issues made up more than 34% of the
portfolio, followed by mortgage-backed investments, which were just under a
quarter of the fund, and a 20% weight in emerging market debt. It also held
a mix of high-yield and investment grade credits.
The duration is very defensive, at 2.98 years, which is significantly
shorter than the broader Canadian bond market’s duration of 7.4 years.
Alfred Murata and
Daniel Ivascyn use a process that is a mix of top-down macro analysis and bottom-up
security selection. The macro analysis looks at the long-term outlook and
the near-term cyclical view. This helps set the sector mix, duration, and
yield curve positioning. Securities are chosen using a
fundamentally-driven, bottom-up process.
The managers look at the portfolio in two distinct parts: high quality
core, and non-core. Within the high-quality core portion, they focus on
investment grade issues in developed countries and agency mortgage backed
securities. This portion is designed to provide down-side protections and
modest returns in periods when economic growth is weak. The non-core
portion, which targets growth, holds lesser-quality issues such as
high-yield bonds, emerging market debt, and non-agency mortgage backed
As of July 31, the fund is ahead 5.2% year to date, handily outpacing the
index and its peer group. This fund has the potential to deliver excellent
risk-adjusted returns when compared with its peers. With its very active,
tactical approach, I believe it can outperform as we enter a more
challenging environment for fixed-income investments. While not a core
holding, it can be a great addition to a diversified fixed-income sleeve.
PIMCO Monthly Income Fund
: PIMCO Canada
Global Fixed Income
FundGrade A+ Awards:
2103, 2014, 2015
Low to Medium
Alfred Murata since Jan 2011; Daniel Ivascyn since Jan 2011
PMO005 (front end load)
Minimum initial investment:
Dave Paterson, CFA, is the Director of Research, Investment Funds for
D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due
diligence on a variety of investment products. He is also the publisher
Dave Paterson’s Top Funds Report,
offering regular commentary and in-depth analysis of Canada’s top
investment funds. He uses a unique analytical approach to identify
funds with strong, risk-adjusted returns, and regularly publishes his
insights and analyses in Fund Library.
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only and is not intended as personalized investment advice.