Pimco Funds Types Strategies and Investment Details

Pimco Funds offer a wide range of investment options, including bond and stock funds, as well as alternative investments.

The firm's flagship Total Return Fund, for example, focuses on income generation through a diversified portfolio of fixed income securities.

Pimco's funds are designed to help investors achieve their long-term financial goals, whether that's saving for retirement or building wealth.

By investing in a Pimco fund, you can tap into the expertise of the firm's experienced investment team and benefit from their research-driven approach to investing.

PIMCO's investment process integrates insights from its Cyclical Forums, which anticipate market and economic trends over a 6- to 12-month period, and the annual Secular Forum, which projects trends over a 3- to 5-year period.

The company's funds offer a range of strategies, including the Pimco Global Bond Unhedged fund, which can take positions in emerging-market governments and corporations. Manager Scott Mather expects emerging markets to continue growing in importance for his fund.

Mather's fund has returned 7.4% annualized over the past three years, beating its index by an average of 3.9 percentage points per year. The fund yields 1.5%.

Pimco All Asset, on the other hand, invests in other Pimco funds and focuses on beating the consumer price index by at least five percentage points per year. Manager Rob Arnott relies on computer-driven models to determine asset allocations.

Pimco All Asset invests in other Pimco funds, rather than buying individual stocks or bonds directly. This approach allows manager Rob Arnott to maintain a laser-like focus on inflation.

Arnott seeks to beat the consumer price index by at least five percentage points per year on average, over a full market cycle. He believes a burst of inflation is on the way, and rapidly rising prices can wreak havoc on traditional investments.

The fund is forecasting a 46% chance that the pace of economic growth slackens in the next six months. With flat economic growth, a slowdown and a recession are essentially the same thing.

Arnott relies on computer-driven models to determine how he allocates the fund's assets among Pimco's menu of funds. High-yield U.S. debt and emerging-markets bonds should hold up well as inflation accelerates, provided that the inflation rate doesn't explode.

The fund has done well over the long term, returning 7.9% annualized over the past ten years. That compares with a 2.4% annual rate of inflation.

Pimco Low Duration is a fund that might be a good option for risk-conscious investors. It's managed by Gross, the same person behind Total Return.

The fund holds 65% of its assets in bonds that mature in three years or less, making it a relatively safe choice in a rising-rate environment.

Its track record hasn't matched that of Total Return, with a 4.0% annualized gain over the past ten years that trailed Total Return by an average of 2.6 percentage points per year.

Despite this, Low Duration still beat 80% of its peer group (taxable short-term bond funds) over the same period.

The Pimco Commodity Real Return Strategy (PCRDX) has returned 7.5% annualized over the past ten years, besting the Dow Jones-UBS index by 3.3 percentage points per year on average.

Manager Mihir Worah uses derivatives to capture the performance of the Dow Jones-UBS Commodity Total Return index, but tweaks his bets to gain an edge over the index.

Worah's allocation to precious metals is greater than the index's because Pimco believes inflation will pick up over the next year.

He invests the bulk of the fund's remaining cash in a portfolio of Treasury inflation-protected securities (TIPS) that he actively manages.

Worah also likes inflation-linked government debt issued by Australia, Mexico, and Italy, all of which pay higher interest rates, after accounting for inflation, than U.S. debt.

A lower-cost clone of the Commodity Real Return Strategy is available: Harbor Commodity Real Return Strategy (HACMX) charges 0.94%, saving investors 0.25 percentage point per year.

Mark Kiesel, the manager of Pimco Investment Grade Corporate Bond, uses a three-step process to find the best corporate bonds. He and his 90-person team start by assessing promising countries and industries to invest in.

Their mission is to find companies that are growing at two to three times the rate of the overall economies in which they operate. This approach has led to some remarkably good forecasts, including Kiesel's call of the top of the U.S. housing market in 2006.

The fund focuses on U.S. companies, but Kiesel has been increasing his stake in emerging-markets issuers in recent years. About 15% of the portfolio is invested outside of the U.S., primarily in Brazil and Russia.

The fund's recent 2.7% yield and 10.5% annualized returns over the past five years place it in the top 1% of all taxable intermediate-bond funds. It even beat Pimco Total Return by 2.2 percentage points per year on average.

Kiesel has turned bullish on real estate-related sectors, buying up the bonds of Weyerhaeuser, Masco Corp., and USG Corp. These picks have served shareholders handsomely, contributing to the fund's success.

Global Bond Unhedged funds, like Pimco Global Bond Unhedged, invest in debt from governments and corporations worldwide, including emerging markets. This approach allows for diversification and potentially higher returns.

Scott Mather, manager of Pimco Global Bond Unhedged, believes emerging markets will continue to grow in importance for his fund. He cites the blurring of lines between emerging and developed markets, with many emerging countries now financially healthier than some developed nations.

The fund's performance is measured against the JPMorgan GBI Global FX New York Unhedged index, which has a heavy allocation to developed-market government debt. Despite the European Union's struggles, Mather has found attractively priced bonds and sectors in Europe.

European covered bonds, similar to U.S. mortgage-backed securities, have performed well for Mather in recent years. He's also found value in bonds issued by German government agencies, such as the KfW state-sponsored development bank.

The fund doesn't hedge its currency exposure, which means it benefits when the U.S. dollar falls relative to other currencies. This strategy has paid off, with the fund returning 7.4% annualized over the past three years, beating its index by an average of 3.9 percentage points per year.

PIMCO's investment process integrates insights from its Cyclical Forums, which anticipate market and economic trends over a 6- to 12-month period.

This approach allows PIMCO to identify opportunities and potential risks by considering both short-term and long-term horizons.