I've been looking at PSTDX and PIXDX. Lipper has PSTDX classified as a large cap core fund and PIXDX is a specialized diversified equity fund. Except for 2008 (which is a very big except), both funds have done quite well over the past 5 years.
I sense these funds are complicated (with the use of derivatives and such) and therefore unlike other large cap funds such as Yacktman. Does anyone understand how these PIMCO funds work? Are they suitable for use as core large cap funds? Thanks!
Comments
PIMCO has funds in several sectors (small caps, real estate, commodities) that are managed the same way. They invest in index-based derivatives rather than actual stocks. Because they only hold derivatives, they can do some voodoo with the collateral with the expectation that it will boost returns over what the index itself can provide. This strategy seems to have worked well but I don't think they can guarantee it will always work going forward.
Also you should note that these funds are not tax efficient, compared to regular index funds. You should hold them in tax advantaged accounts, otherwise your taxes could wipe out any advantage over a regular index fund.
I hold PRRSX (real estate) and used to hold PCRIX (commodities). I expect to put some money in PIXDX/PXTIX at the next buying opportunity and use it as one of my core large cap holdings. I don't have any strong reason for choosing PIXDX/PXTIX over PSTDX/PSTKX except that I wanted a little value bias. That and apparently I am a sucker for giving Rob Arnott money.
Fundamental Advantage Total Return (PFATX) is a little-discussed alternative fund that is long RAFI1000 and short S & P 500; that's kind of an interesting, very low-key way to play the RAFI1000.
What I have left in the Pimco Commodity RR fund is being moved to the new AQR Risk-Balanced Commodity fund.
As has been noted, the Pimco "PLUS" equity funds use the special tools to attempt to obtain the objective. I personally don't have a problem with this, but an investor must be aware these are not plain vanilla investments in company equities; backed by TIPS and/or other bond holdings.
These methods also apply to some of the Pimco bond funds.
Whether one might consider these to be a traditional core holding in a given equity or bond sector is another question. In the final analysis, we all hold various funds to obtain a profit based upon the skillset of management; if the fund is an active managed fund.
Other sector funds, be they equity or bond style do use some forms of "enhancement" to meet an objective. I will suspect there are many folks who do not realize that some special tools are being used to "protect or enhance" a given fund they hold in their portfolio.
I have placed a link here from Stockcharts relative to PSTDX and the broad US Large Cap Total Return Index for review of performance. You may choose to save this chart/site for future use; as this is an active use link.
As to this line chart.....a few notes. At the top left, you will find the date range. Just below the chart bottom you will also find a "200 day" block. You may move this slider to the left to look at any other 200 day section (going backwards) of these two funds compared. You may also "grab" either end of the slider and stretch the period to a longer time frame or a short time frame. Also, to the far left end of the slider area, you will find an icon colored in bright lime green/red (small squares) with two other icons. With the line chart that is set in place with this link, click on this icon and the display will change from the line chart to a bar graph to display the same information. You may find this of more visual value; as everyone has their favorite methods of data display. Also, with saving this link; when you return to the chart, the funds I have placed with be the ones you again view. However, again below the chart area and to the left you will see the tickers that I have entered. You may replace these with whatever tickers you choose to compare against one another. Type the first ticker, then a comma; then second ticker. I don't enter more than 5 at one time, as either the line or graph chart becomes a bit too busy. Also, with the line chart displayed, if you choose, you may hover the computer mouse pointer over any point of the line and the date and pricing for that date will popup.
PSTDX,$DJUSLTR
Lastly, this link is for Pimco funds with daily pricing. The updates are usually quite late at night. I can not get this to link to the "D" shares, only to the base "A" shares. So, once this link opens, you will find a "filter" for choices along the left edge of the funds list. Click onto the dropdown icon to change to the share class for your new list. Next, you will also find a full list along the left edge to select or deselect what type of Pimco funds you want displayed. Lastly, after making these settings, when you click upon a fund name in the list for further review, that fund data will load a new page. At this new page is some generic info about the fund, but in particular is a full list of PDF and XLS data pages that will let one dig into all areas of the fund. This fund listing page is well constructed for ease of use.
Pimco funds list
I may have missed something about the links, but believe most area have been covered; and I'm only on the first cup of coffee......so, writing errors may exist.....:):):)
Regards,
Catch