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PIMCO Inflation Response Multi-Asset

sligo
edited January 2013 in Fund Discussions
While looking to fill a potential spot in my portfolio that will more directly address the future inflation threat PIMCO's PIRMX fund seemed on the surface to fill this requirement. The type of assets used, also being actively managed, as well as the PIMCO resources utilized appear to meet this need. However the ranking, turnover and longevity are not as encouraging. Is this good marketing hype or has anyone taken a look at this fund ? Are there better alternatives ? Is it too early to move in this direction or wait and watch Fed activity. My problem in the past is waiting too long only to find the pundits telling me I'm too late and have already missed the boat.

Thanks

Comments

  • scott
    edited January 2013
    I think it depends on what you want. If you are looking for a multi-asset fund whose intent (and whose manager believes in the possibility of significant inflation) is to keep you ahead of inflation with less volatility and risk, I like Pimco All Asset All Authority (PAUDX), which is managed by the excellent Rob Arnott and whose target (if I remember correctly) is something like CPI + 6% (actually it's +6.5% - I was close.) That fund can use pretty much any Pimco fund and is quite well managed.

    Or are you looking for more aggressive inflation protection?

    I've looked at the Pimco Inflation Multi-Asset fund and am not really a fan; it brings together elements of Pimco Commodity RR and Pimco Real Estate, as well as Pimco EM bond funds and gold. There doesn't appear to be any ability to go into commodity stocks.

    Pimco has discussed concerns regarding inflation, but I feel like Pimco Inflation Multi-Asset is more a "product" than a real thought-out answer - it pretty much mostly takes pre-existing strategies under the Pimco banner and throws them together.

  • sligo
    Reply to @scott: Appreciate your input and yes I already have PAUDX in my portfolio. It was more the combination of assets that attracted my attention but as you point out Arnott is covering most of these. Beyond this I will be looking at funds like ARCNX or etf's for commodity exposure and monitoring global real estate opportunities.
  • scott
    edited January 2013
    ARCNX has not done that great so far, but I like the idea of a commodity fund that's actively managed and can somewhat attempt to limit drawdowns. It doesn't have a ton of correlation (at least last I looked) to Pimco's fund. The Cohen and Steers and T Rowe Real Asset funds are interesting (although the Cohen and Steers fund is rather high in terms of expense ratio - that fund is also multi-manager), but I think you can part-and-piece together some compelling funds with commodities, global real estate and more.

    I actually do think consumer staples is actually not a bad balance/pairing against real asset funds, as people are always going to need TP and whatnot, and while those companies may face commodity cost issues in an inflationary environment, they've certainly been able to raise prices in recent years - I remember when Head and Shoulders used to be the cheap brand and now when it's not on sale it's like 8 bucks. Things like J & J and Pfizer are also worth considering, and much of that stuff offers a nice dividend in the meantime.

    I own Reckitt Benckiser, which owns the cold medicine Mucinex (among a ton of other various brands) - that stuff's like 15 bucks a bottle. Nuts.
  • GinkoGinko
    Arnott certainly is a smart investor.

    However, if you want someone who's fearful of imminent inflation, he's certainly not your man. Half his portfolio is in emerging-market stocks and bonds along with lots of other bond and income-generating investments; he has virtually no positions on classic inflation hedges like inflation-protected bonds, commodities, or real estate.

    Certainly, inflation will start to rise in the future, some time when firms start getting closer to their productive capacity, unemployment falls at least a couple of percent more, and consumer demand rises. As we edge closer to that point, and developed central banks react by letting rates rise, I'm confident that Arnott will adjust the portfolio accordingly.
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