| Fund Company | PIMCO Canada |
|---|---|
| Fund Type | Global Fixed Income |
| Rating | A |
| Style | Income Focus |
| Risk Level | Low - Medium |
| Load Status | Optional |
| RRSP/RRIF Suitability | Excellent |
| Manager | Alfred Murata since January 2011 |
| Dan Ivascyn since September 2014 | |
| MER | 1.38% |
| Fund Code | PMO 005 - Front End Units |
| PMO 105 - Low Load Units | |
| Minimum Investment | $1,000 |
Analysis: After coming out of the gate very strongly in 2011 and 2012, performance of this global bond fund has certainly moderated to more sustainable levels. For the year ending January 31, it gained 5.3%, lagging both its index and peer group.
Despite this slowdown in performance, this remains one of the strongest global bond funds available. It is very actively managed and invests in non-Canadian dollar denominated fixed income investments. It is managed using a process that is a mix of top down and bottom up analysis to build the portfolio. The top down macro view is used to set the fund’s duration, yield curve positioning and sector exposure, while the bottom up research looks to identify the most attractive non-Canadian securities that meet the its broader asset mix objectives.
The portfolio is managed using a bit of a barbell approach, with higher yielding, growth dependent issues on one end, and higher quality, defensive issues on the other.
The fund remains conservatively positioned, with a duration of 2.83 years, which is well below the index. They are currently focusing on mortgages and government bonds in the quality bucket, and high yield and emerging market debt in the higher yielding bucket.
The managers believe that global growth will pick up this year, helped largely by the drop in oil prices. While they still expect the U.S. to start raising rates, the easing policies of other central banks are expected to limit how far the Fed can move.
To benefit from this, they are keeping duration short and are focusing on debt that is more senior in the capital structure. The portfolio remains well diversified and they continue to focus on the income levels generated by the underlying issues.
As I have said in the past, I like this fund, but it is a bit riskier than historic volatility will have you believe. It is a great compliment to an otherwise well diversified portfolio, and is expected to continue to deliver decent cash flow to investors.