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I’m looking for some help on these two bond funds, PIMIX and PUCZX. For my bond side I currently have DHEAX and PIMIX. I’ve been thinking about moving from PIMIX to.PUCZX. It looks like PIMIX and PUCZX have some similarities and I have heard PIMCO raised their fees quite a bit on PIMIX. Does anyone see an obvious reason to make or not make this change? Thank you in advance for your thoughts.
If the reason why you are considering leaving PIMIX is an increase in its reported ER (0.74% in the 2018 summary prospectus, 1.05% in the 2019 summary prospectus), I respectfully suggest that you take a closer look.
The true operating costs of funds vary from year to year based on how they execute their strategies. If a fund decides to trade more frequently, its costs (due to commissions, spreads, etc.) rise. This rise isn't reflected in its ER because trading costs aren't included in the ER, but it's an increase just the same. Now if you like the idea of the fund trading more frequently, then you accept the higher expense as a cost of doing business.
Similarly, if a fund decides to use more leverage by, e.g. borrowing short and lending long, its interest costs go up (to borrow short term money). If you like that strategy, you accept the interest charges as a cost of leveraging. Unlike trading costs that are hidden out of sight, interest expenses are hidden in plain view, buried in the ER.
This is why PIMCO footnotes the ERs in its prospectuses.
To the extent a Fund enters into certain investments, such as reverse repurchase agreements, or enters into certain borrowings, such as a line of credit, the Fund incurs interest expense. Interest expense is required to be treated as an expense of the Fund for accounting purposes, but the amount of interest expense, if any, will vary from year to year with the Fund’s use of such investments or borrowings as an investment strategy.
Thank you for the explanation about the fees. My other concern with PIMIX is the 136.4 billion they have to manage vs the 1.4 billion PUCZX. PUCZX seems to be doing a little better with just a bit more risk. What I’m not sure about is how similar are these funds. It looks like they use some of the same strategies, but I’m really not sure.
PIMIX is invested at over 75% in securitized. A good replacement fund is VCFAX with about 90% in securitized. JMUTX+PUCZX are more diversified. So, I would rate these 4 funds as follow. If you want lower SD then go with VCFAX, if you want better performance then go with PUCZX (its higher SD is still relatively OK)
PIMIX is invested at over 75% in securitized. A good replacement fund is VCFAX with about 90% in securitized. JMUTX+PUCZX are more diversified. So, I would rate these 4 funds as follow. If you want lower SD then go with VCFAX, if you want better performance then go with PUCZX (its higher SD is still relatively OK)
I view PUCZX a step up in risk, compared to PIMIX. It does not have as good of a performance record in downmarkets, and it is much more heavily dependent on derivatives. If I were going to replace PIMIX, I would look at VCFAX/VCFIX as a better alternative, to avoid increased risk. JMUTX would be my second choice to replace PIMIX. JMSIX and PUCZX are more risky options to consider.
Thank you all, it was very helpful. I’ll look into VCFAX and JMUTX. I hadn’t considered these funds. I thought maybe PUCZX was more similar to PIMIX than they actually are since they both use derivatives. I’m not crazy about the idea of more risk associated with PUCZX due to more reliance on derivatives and junk bonds. I’ll probably steer clear of it. Thank you again.
PUCZX has dropped 1.36% in the last week, and PIMIX has dropped 1.01% in the last week--maybe you are right in that in at least the last week of this market correction, both of these multisector bond oefs were poor performers. JMUTX was down .58%--not great but better than PIMIX and PUCZX. VCFAX was only down .05%, so it held up very well in this correction so far. The last week is a good measure of how these funds will perform in major peak to trough downmarket periods.
US treasury and high quality investment grade bonds have done the best. Junk and emerging market (USD hedged or local currency) bonds had declined.
When rates decline high rated bonds do great. As a mainly bondholder like me who wants to make more money in bonds, I'm looking for more flexible funds that do better in most markets.
NHMAX (HY Muni) has over 70% below investment grade bonds but they still managed to make 1% last week. While most Multi lost money last week IOFIX made just 0.07 but PTIAX made 1% and VCFAX,SEMMX just lost -0.1%
When rates will go up treasuries will lose a lot more.
PUCZX+PIMIX disappointed last week. I use PIMIX as a second-tier fund since early 2018 and now added PUCZX to the same list. I can still use both for trading. PUCZX is rated at the top 5-9% for 1-3 years at M* but 49 for YTD. PIMIX is rated at YTD-63 one year-69 3 yr-23
Comments
The true operating costs of funds vary from year to year based on how they execute their strategies. If a fund decides to trade more frequently, its costs (due to commissions, spreads, etc.) rise. This rise isn't reflected in its ER because trading costs aren't included in the ER, but it's an increase just the same. Now if you like the idea of the fund trading more frequently, then you accept the higher expense as a cost of doing business.
Similarly, if a fund decides to use more leverage by, e.g. borrowing short and lending long, its interest costs go up (to borrow short term money). If you like that strategy, you accept the interest charges as a cost of leveraging. Unlike trading costs that are hidden out of sight, interest expenses are hidden in plain view, buried in the ER.
This is why PIMCO footnotes the ERs in its prospectuses. From a 2011 SEC filing in response to SEC comments on what PIMCO includes in its prospectuses.
https://www.sec.gov/Archives/edgar/data/810893/000119312511156143/filename1.htm
These are not comments pro or con about either of the funds.
So, I would rate these 4 funds as follow. If you want lower SD then go with VCFAX, if you want better performance then go with PUCZX (its higher SD is still relatively OK)
Look at PV(link)
FD,
Why do you suppose PUCZX was down 0.38% yesterday? I do not recall this much movement.
Mona
Well, I don't know; but was curious, too.
Futures/forwards, fairly large percentage of holdings below BBB.
Some corp. and many junk bonds not having as good a time right now; as IG bonds.
Composition of PUCZX
also gsy of course
frifx ouch
As a mainly bondholder like me who wants to make more money in bonds, I'm looking for more flexible funds that do better in most markets.
NHMAX (HY Muni) has over 70% below investment grade bonds but they still managed to make 1% last week.
While most Multi lost money last week IOFIX made just 0.07 but PTIAX made 1% and VCFAX,SEMMX just lost -0.1%
When rates will go up treasuries will lose a lot more.
PUCZX+PIMIX disappointed last week. I use PIMIX as a second-tier fund since early 2018 and now added PUCZX to the same list. I can still use both for trading. PUCZX is rated at the top 5-9% for 1-3 years at M* but 49 for YTD. PIMIX is rated at YTD-63 one year-69 3 yr-23