A PIMCO Fund Manager You Might Not Know

Ted

FYI: In David's commentary this month he features PIMCO and their funds. We've all heard of Mohamed El-Erian, Bill Gross, and Rob Arnott but how about Dan Ivaseyn manager of their multisector bond fund Pimco Income Fund (PONAX). For your information, I'm linking a 06/12 article from Barron's about the fund and it's manager and a link about it's perfromance. It takes a lot for me to recommend a fund, but here's one I like very much.. In fact I like it so much, last Tuesday I bought some C shares (PONCX) with some left over cash in my brokerage account.
Regards,
Ted
http://online.barrons.com/article/SB50001424053111904346504577531080010077836.html#printMode

Lipper Snapshot Of PONAX : Quintile Rank for 5yrs. 1 : http://www.marketwatch.com/investing/fund/ponax

catch22

Morning Ted,
Yes, the manager/team has performed well; including 2008 and hopefully will continue going forward. We do hold PONDX, which is the "D" share class of the "income fund", and I recall a few others here, who also hold this fund.
Regards,
Catch

bee

Hi Ted,

Many of us here are with you on this manager and all of his fund's iterations (PIMIX, PONAX, PONCX, PONDX, PONPX, PONRX and PDI (CEF version)).

I believe PIMIX is available through Vanguard brokerage:
click here

His ending comment is worth noting:

"When you look at the trajectory of yields of the past few years, we are certainly at a point now where we are not at the destination, but we are pretty close to the destination," Ivascyn says. "Increasingly, fixed-income investors are going to likely earn their coupon with less and less prospect for capital appreciation." That means he'll have to sift very carefully through the opportunities.

Hiyield007

The percentage has fluctuated the past several months but at this time PONDX is 69.8% of my portfolio. Hasn't had even a 1% drawdown in 2012.

catch22

Hi bee,

fixed-income investors are going to likely earn their coupon with less and less prospect for capital appreciation

An aside, which has been discussed here; are the millions of others who are not investors, but those perhaps ages 65-100 years who will travel in few other investment areas other than CD's at their local bank or credit union. These folks are really in the money grinder, as the paltry rates of return, which in most cases will also be taxed by federal, state and/or local governments will also be offset by inflation creep. A most sad state of affairs for too many good folks.
Take care,
Catch

Charles

Reply to @catch22: I'll speculate that there are couple reasons: 1) lack of education in investing options, which scott has written well about, and 2) distrust in just about any investment option beyond CDs after the 2008 financial melt down.

catch22

Howdy Charles,

Yes, I fully agree. The education aspect has been discussed numerous times, including at the FundAlarm site. Very few (less than 5%) folks I have known for more than 30 years have ever placed much thought into investing their monies; at least to the aspect of discussions here.

Regards,
Catch

fundalarm

Reply to @bee: don't forget PDI which, amaizingly, is still trading at a discount. Dan Ivascyn (not David Ivaseyn, dear Ted) has been buying his own fund.

ron

I would say most of us don't understand how he does it except he uses derivatives and there may be hidden risk in the fund that may not be obvious. Hope not.

Charles

I chose the younger RiverNorth Doubleline Strategic Income RNSIX over PIMCO Income PIMIX after MFO featured it in April 2011. In addition to its great appreciation and strong yield, I was most attracted to its high Sharpe and low volatility, right from inception.

After Ted's post, I did a quick comparison of the two. PIMCO has enjoyed a terrific 2012 and stronger overall growth, whereas the RiverNorth fund has been a bit more steady-eddy since inception, a little less than two years ago. It closed to new investors after being open for just about a year. Results below:

bee

Reply to @Charles:
Its interesting that RiverNorth is the second largest holder of PDI, which is the CEF version of PIMIX (Pimco Income fund). In fact, it looks like your RNSIX holds 200,000 shares...must be a vote of confidence when the competition holds PDI in their own fund. Here the link and a screen shot
finance.yahoo.com/q/mh?s=PDI+Major+Holders

bee

Reply to @ron:

Another source for sharing is M* discussion board... here is a recent thread on PONDX. There are many others if you have the time to browse their threads

socialize.morningstar.com/NewSocialize/forums/p/312647/3313877.aspx#3313877

Ted

Reply to @fundalarm: Thanks for the catching my mistake, I changed David to Dan in my post,
Regards,
Ted

Charles

Very cool. Glad to know that I too have a piece of intrepid PIMCO Income. Thanks bee.

Looks like RNSIX holds about 18% of its portfolio in closed-end funds, about fifty or so names, two of which are PIMCO. Here is composition from earlier this year:

Mark

Reply to @bee: And a similar discussion on the CEF version PDI

http://socialize.morningstar.com/NewSocialize/forums/p/316912/3345593.aspx#3345593

fundalarm

Reply to @ron: PIMCO just produced semiannual report for PDI (equivalent of PONDX) where they speak of performance contributors and detractors. Contributors are mostly non-agency MBS, financial and insurance companies' bonds, etc.... and the fact that people continue to reward investments with yields in this zero rate invironment. really -- there is no mistery for anyone doing just a bit of homework.

Bitzer

I'm a long time owner of PONDX and hoping that it doesn't become another one of those "good until it isn't" funds (remember Magellan, Bill Miller, etc.?)

AndyJ

Reply to @Bitzer: Well, the assets are piling up, pushing $17 billion now. Gundlach's DBLTX (all mortgage, versus PIMIX's half or more mortgages) started slowing down in the mid-20 billions or so. Consider that there's a large slug of PIMIX's AUM in the Arnott All-Everything funds, and those are popular funds too, on their own merit.

ron

Reply to @fundalarm:
I am not referring to what is rather simple straight foward data but rather what is not.
This is more of what I mean.

Type % Net % Short % Long
Cash -73.42 85.65 12.23
US Stocks 0.00 0.00 0.00
Non US Stocks 0.00 0.00 0.00
Bonds 166.61 12.00 178.62
Other 6.81 0.00 6.81
Note: Contains derivatives or short positions

fundalarm

Reply to @ron: i am going to get crucified for this, but what's wrong with derivatives or a bit of leverage in an environment when leverage and financing don't cost much (except Dodd-Frank reporting)? It is often the most efficient way of trading for institutions who don't wont to sell their precious stocks and bonds, but rather scale their swaps and futures to accommodate crazy cash flows. this is prudent management of the fund.

fundalarm

Reply to @AndyJ: they are not slowing down because of cash flows but rather because of valuations. bonds are not stocks and can't go up forever but to par value of $100. if a manager started buying those at 60c on a dollar and they went to 80c, then you've go a quick appreciation, then it is much more gradual as some of them default and will never reach par while others might go to premium since they pay 8.5% coupon and continue paying.

catch22

Morn'in fundalarm,
You won't be crucified from this house. This is the nature of the investment world to which we here have chosen to accept the rules and/or methods of the game. Our house is not blind to what type of tools are at use to obtain returns from some holdings. PONDX and other share classes, as well as your PDI holding are not plain income funds with some mortgage holdings. Looking at a more "normal" mortgage securities bond fund finds about a +2.5% YTD return; as measured against an almost +20% YTD for a PONDX. Our house is under no illusion as to how PONDX or a similarly operated fund is able to obtain such a stellar return at this time.
Someone is trading something at this very moment to obtain a positive return for any number of funds any of us hold. I/we pay them good money to hopefully know what they are doing; and for me/we, the individual to not have to become involved in trading tools of which I/we have no skill sets.
You are correct with your analysis of the situation as it now stands with the current world of investments, of which; we here are involved.
I/we either stay and play in the markets as they are now structured or I/we take our money home and buy a truck load of CD's and never have to visit MFO again. Not my idea of "fun"!

Thank you, fundalarm.

Take care of you and yours,
Catch

AndyJ

Reply to @fundalarm: I should have been more specific on what I meant by "slowing down": I was referring to the yield of DBLTX, which has been in steady decline. The cash stake, which has been up to 20% in the past 6 months or so, must bear a lot of the responsibility; with more than a billion a month coming in, JG hasn't been buying enough to keep the bond stake up.

Cash rising from mid-single digits to 20%, and that 20% of the fund earning 0% yield, has to have brought down the overall yield of the fund. He just hasn't been able to keep up with the inflow, which is apparently the main reason TGLMX has outdistanced DBLTX this year ... other than the cash stake, the two funds have roughly the same mix of risk-on vs. risk-off assets.

fundalarm

Reply to @AndyJ: you're right about the cash driving down the yield, but it is also a function of capital appreciation. if you buy a fund investing in bonds paying (i am simplifying here) fixed coupons at inception, let's say $100 monthly, and the fund's assets appreciate, but the underlying bonds still pay the same $100 monthly, then your yield goes down to accommodate the price appreciation. that's why Total Return is what matters in investing -- capital appreciation + interest (or dividend, for equities). Many bond funds had huge capital appreciation, but there is a limit to it, that's why going forward all you can get is current yield. (i am optimistically rejecting a huge spike in interest rate scenario and predicting continuous muddle-thru.)

AndyJ

Reply to @fundalarm: Thanks, good points you make, clearly stated ... I didn't mean to imply that yield is all there is to bonds.

Investor

Ted, why did you buy the C shares instead of D? C shares are much more expensive and loaded.

Ted

Dear Investor: Good question ! Unfortunately, the 'D' shares are not available on Morgan Stanley mutual fund platform. If I'm not mistaken, the 'D' shares are only available in company 401(k) plans.
Regards,
Ted

Hiyield007

>>>Class D shares - Do not have an initial sales charge or a contingent deferred sales charge. Cannot be purchased and held directly with PIMCO Funds. These shares are offered through financial service firms, such as broker/dealers or registered investment advisors.<<<


D shares are available for taxable or non-taxable accounts and widely available at most firms ala Fidelity, Scottrade, etc.

Investor

Reply to @Ted: No, D shares are widely available at the regular retail channel. The R shares are typically found in 401k plans and lower cost. But even the retail D class is cheaper than your C shares. You can easily buy D shares at Fidelity for example.

Old_Joe

Reply to @Hiyield007: Yep. Got mine at Schwab. No initial sales charge or contingent deferred sales charge.