Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Ex-Thornburg managers Kinkelaar and Remily are now plying their trade at PIMCO in the PQIIX fund that I have placed on my watch list based mostly on their past performance. I was wondering if anyone had any first hand experience using this duo at Thornburg and possibly share any pro's/con's or comments. My intention for this fund would be for a "longer" term holding. Thanks
I haven't been that pleased with the fund (although certainly not as displeased as with Pimco's new EM fund - yeesh, glad I dumped that months ago) - which is admittedly newer - so far. I started a position, but haven't added to it and I'm not sure I will yet. They certainly had success at Thornburg.
Reply to @scott: Which Pimco EM fund? The EM Equity one or the EM Multi-asset one?
It's still way too early to tell about whether it will be successful or not. The EM Multi-asset should be ok as it's hovering around 50/50 EM stock/bond. Pimco isn't the top in each respective asset class and so they will have to shine around the balancing act between the different EM asset classes.
However, unless you are in the institutional version of these funds - they can be quite expensive otherwise. I believe the EM Multi-asset Fund D shares go for 1.75% ER.
But the interesting thing is that Masha Gordon had mediocre success running the Goldman Sachs EM fund and so I thought it was an interesting choice they made.
Mind you, FEO isn't cheap either but I've been happy with them so far.
But yeah there's a dearth of lower-cost options out there. But the Pimco EM funds still have potential though because some of the EM Directors weren't hired until more recently but costs have got to come down though.
Reply to @Kenster1_GlobalValue: Neither EM fund has performed up to reasonable expectations, although the issue is primarily the stock side - that fund has had what I would call a terrible start. While one can certainly take a long-term view, it's hard to argue that the stock fund hasn't lagged benchmarks/category pretty significantly. Gordon's performance wasn't that great with Goldman, but the Pimco fund has consistently sat near the bottom of the category - not exactly a great way to debut.
I think DEM and FEO are fine choices, although at this point my EM exposure is quite a bit single stocks (including Jardine Matheson and Jardine subsidiary Dairy Farm.) Matthews continues to be the best stop for Asia fund-wise, and DEM/FEO allow a very nice yield while waiting for EM - which I continue to believe is a long-term story.
sligo, another idea around dividend income would be PGDIX. It's well diversified and looks to be less volatile then the Pimco fund. I reduced my PRPFX holding earlier this year and bought into PGDIX. It's held up relatively well the last 3 months through this down turn.
I don't think it really means all that much but PQIIX (Pimco Div & Income) is a bit ahead of TIBIX YTD. So far so good out of the gates this year - nothing worrisome at all on that front so far.
But we can already see that PQIIX is taking a bit of a different path than TIBIX --- PQIIX isn't going after as high of a yield as TIBIX. So you'll notice that TIBIX has more Telecom and Utilities than PQIIX. PQIIX seems to have a higher focus on company quality and dividend durability & growth.
===
Back to EM --- yeah the Pimco EM Multi-Asset D shares are quite expensive. 2.59% ER but with a current fee waiver bringing it down to 1.74% ER. Hard to see how they will be able to outperform a mix of say 50/50 EM stock/bond ETFs & CEFs for a combined ER half of what Pimco is offering.
Reply to @Kenster1_GlobalValue: While the D share of Pimco funds are on the NTF platform, they also have high ER. Personally I pay the transaction fee and buy the institutional share at much lower ER. At least at Fidelity, one do not need $1M to do so.
Reply to @MikeM: Thanks for the idea however my brokerage is through Vanguard which does not carry any Principal funds. My consideration therefore would be 1) use another brokerage, 2) buy the A shares direct @ 3.75% and a 1.16% ER and so immediately reduce my invested dollars by approx. $1,000, 3) buy C shares with 1% CDSC and 1.9% ER or 4) Spend $20 to buy the institutional class of PQIIX @ 0.83% ER through Vanguard. Naturally this is only part of the decision process but nevertheless for me, rightly or wrongly, weighing the costs versus performance can definitely impact the final decision. Thanks again.
Reply to @Kenster1_GlobalValue: In M* their analysis highlighted how TIBIX was pushing the envelope for yield in nine different categories with an implied warning that there was certainly risk involved. Also some of the categories were being run by untested managers. I did get the impression from the PIMCO literature that they were on a less risky path with only the three managers calling the shots (plus Gross, El-Erian et al behind the scenes) using as you said a longer term perspective.
Investors who chase higher yields in the U.S. face added risk, because many of the companies that pay a lot are troubled in some way—and might not be able to boost, or even sustain, their dividend payments in the future. Consider that, over the past year, the 50 U.S. companies with the highest yields among the Standard & Poor's 500-stock index have produced only one-fifth the dividend payment growth of the next 50 companies.
In other words, investors seeking plump yields can either look through the scratch-and-dent bin in the U.S. or choose among top-quality merchandise in other markets.
It isn't just the difference in stock-market performance that has produced such a wide gap in dividend yields. The U.S. also has become an anomaly for the relatively low percentage of profits its companies pay out as dividends, says Brad Kinkelaar, co-manager of the Pimco EqS Dividend fund, which launched in December and has $293 million in assets.
"U.S. investors have been taught to believe that you get either growth or income," Mr. Kinkelaar says. "In international markets, investors still demand both."
I think the jury is still out for PIMCO Dividend & Income Builder. While I have respect for Kinkelaar and his team, the fund is clearly untested, and its dividend yield is about half of Thornburg's. I would expect PIMCO to increase the yield. If not, there is not a lot of attraction for the fund, since I could get as good or better with ETFs like SDY. Kinkelaar's experience at Thornburg is certainly a plus. The problem for his fund at PIMCO is that it is just one of hundreds, and, in the end, is HE really calling the shots. Or is it Gross and El Erian pulling the strings from behind the curtain? At least I know the managers at Thornburg are the ones making the decisions. Even if Bill Fries has some input, he is cautious about anyone messing up a good fund. Comparing these two will be helpful in a couple of years, but it is just way too soon right now.
Reply to @Soupkitchen: With $75 transaction fee, many investors can get in as low as $2,500. I learned this here back in FundAlarm days. There is no fee to sell. If you wish to buy more in the future, you can use "automatic investment" option for $5/trade.
Reply to @Kenster1_GlobalValue: From a M* headline - "Dividend Investing Abroad As investors pile into U.S. dividend-oriented stock funds, it may be time to look farther afield." Obviously a common story theme emerging maybe to get investors to quit messing around on the sidelines !
Per M* and SPDRs you can get DWX (SPDRs International Dividend ETF) with a 7% yield but it has come with much higher volatility and risks. Italy is in the top 5 country holdings. Prior the previous rebalancing, Spain was also up there as well but has dropped down to 11th spot.
Investors still ignore Dividend growth which is where the PIMCO Dividend & Income Builder fund focuses on a balance between high-yield and growth. It has been shown that the group of the highest yielders can do quite well but the next group + high-yielders can do even better.
If you want to talk about high yields we've got Spain's Santander and Telefonica --- if you invest and come out on top 5+ years from now, the dividend yield is HUGE but this would be more of a distressed deep-value adreneline-rush turnaround play than just a dividend investing play here.
If you want super higher yields - investors will have to look elsewhere - TIBIX, DWX, DVY, etc, etc. But if you're interested in higher quality companies that can provide a balanced higher yield and higher div growth then the Pimco funds could be an option. A lot boils down to what you already have in your portfolio and what you're looking for.
Comments
http://firsteaglefunds.com/downloads/all/FE_GIB_FundSummary.pdf
It's still way too early to tell about whether it will be successful or not. The EM Multi-asset should be ok as it's hovering around 50/50 EM stock/bond. Pimco isn't the top in each respective asset class and so they will have to shine around the balancing act between the different EM asset classes.
However, unless you are in the institutional version of these funds - they can be quite expensive otherwise. I believe the EM Multi-asset Fund D shares go for 1.75% ER.
But the interesting thing is that Masha Gordon had mediocre success running the Goldman Sachs EM fund and so I thought it was an interesting choice they made.
Mind you, FEO isn't cheap either but I've been happy with them so far.
But yeah there's a dearth of lower-cost options out there. But the Pimco EM funds still have potential though because some of the EM Directors weren't hired until more recently but costs have got to come down though.
I think DEM and FEO are fine choices, although at this point my EM exposure is quite a bit single stocks (including Jardine Matheson and Jardine subsidiary Dairy Farm.) Matthews continues to be the best stop for Asia fund-wise, and DEM/FEO allow a very nice yield while waiting for EM - which I continue to believe is a long-term story.
But we can already see that PQIIX is taking a bit of a different path than TIBIX --- PQIIX isn't going after as high of a yield as TIBIX. So you'll notice that TIBIX has more Telecom and Utilities than PQIIX. PQIIX seems to have a higher focus on company quality and dividend durability & growth.
===
Back to EM --- yeah the Pimco EM Multi-Asset D shares are quite expensive. 2.59% ER but with a current fee waiver bringing it down to 1.74% ER. Hard to see how they will be able to outperform a mix of say 50/50 EM stock/bond ETFs & CEFs for a combined ER half of what Pimco is offering.
And there are great EM ETFs and CEFs out there including DEM and FEO already mentioned. An example of an EM Bond CEF I'm using is ESD (Western Asset EM Bond) --- ESD Fact Card:
https://institutional.myleggmason.com/portal/server.pt?open=18&objID=75760&cached=true&mode=2&userID=225408
For Better Dividend Opportunities, Look Overseas
http://online.wsj.com/article/SB10001424052702303296604577452850482206134.html?mod=WSJ_PersonalFinance_PF14
Investors who chase higher yields in the U.S. face added risk, because many of the companies that pay a lot are troubled in some way—and might not be able to boost, or even sustain, their dividend payments in the future. Consider that, over the past year, the 50 U.S. companies with the highest yields among the Standard & Poor's 500-stock index have produced only one-fifth the dividend payment growth of the next 50 companies.
In other words, investors seeking plump yields can either look through the scratch-and-dent bin in the U.S. or choose among top-quality merchandise in other markets.
It isn't just the difference in stock-market performance that has produced such a wide gap in dividend yields. The U.S. also has become an anomaly for the relatively low percentage of profits its companies pay out as dividends, says Brad Kinkelaar, co-manager of the Pimco EqS Dividend fund, which launched in December and has $293 million in assets.
"U.S. investors have been taught to believe that you get either growth or income," Mr. Kinkelaar says. "In international markets, investors still demand both."
As investors pile into U.S. dividend-oriented stock funds, it may be time to look farther afield." Obviously a common story theme emerging maybe to get investors to quit messing around on the sidelines !
Investors still ignore Dividend growth which is where the PIMCO Dividend & Income Builder fund focuses on a balance between high-yield and growth. It has been shown that the group of the highest yielders can do quite well but the next group + high-yielders can do even better.
If you want to talk about high yields we've got Spain's Santander and Telefonica --- if you invest and come out on top 5+ years from now, the dividend yield is HUGE but this would be more of a distressed deep-value adreneline-rush turnaround play than just a dividend investing play here.
If you want super higher yields - investors will have to look elsewhere - TIBIX, DWX, DVY, etc, etc. But if you're interested in higher quality companies that can provide a balanced higher yield and higher div growth then the Pimco funds could be an option. A lot boils down to what you already have in your portfolio and what you're looking for.