Pacific Investment Management Company is a highly reputable U.S. wealth management company with $1.47 trillion in assets under management (AUM). PIMCO offers a wide range of investment products and financial solutions, including its renowned mutual funds. PIMCO is especially known for its fixed-income mutual funds that demonstrate superior investment returns and earn high marks from mutual funds rating agencies such as Lipper and Morningstar.
PIMCO Investment Grade Corporate Bond Fund Class D
AUM: $6.5 billion
2010-2015 average annual return: 5.40%
Net expense ratio: 0.9%
The PIMCO Investment Grade Corporate Bond Fund Class D seeks to attain attractive returns by holding high-quality corporate bonds. The fund combines PIMCO credit research and a forward-looking macroeconomic outlook to find strong investment opportunities. The fund typically allocates about a third of its portfolio to U.S. Treasury bonds, while the remainder is allocated to investment-grade corporate bonds and mortgage-backed securities (MBSs). About a third of all corporate bonds held by the fund are issued by financial institutions, such as banks and brokerage firms. The remainder is spread out among other issuers, with no single sector accounting for more than 10% of the fund’s corporate bond holdings.
Despite its somewhat high fee level, Morningstar assigned a five-star overall rating and a silver analyst rating for the fund’s combination of experienced management, thorough analysis and superior returns. The fund comes with no load fees and requires a minimum investment of only $1,000. As of Nov. 30, 2015, the fund has a 30-day SEC yield of 3.28% and an effective duration of 6.18 years.
PIMCO StocksPLUS International Fund (U.S. Dollar-Hedged) Class R
AUM: $2.4 billion
2010-2015 average annual return: 7.14%
Net expense ratio: 1.41%
The PIMCO StocksPLUS International Fund (U.S. Dollar-Hedged) Class R is part of a mutual fund family that uses StocksPLUS strategies. Unlike other mutual funds, the fund does not purchase stocks directly; instead, it invests in non-U.S. equity derivatives, which are backed by a portfolio of fixed-income instruments. The fund strives to outperform its benchmark, MSCI EAFE Net Dividend Hedged USD Index, which is composed of equities of companies from Europe, Australia and the Far East. The fund hedges its currency risk and keeps its foreign currency exposure to no more than 20% of its total assets. About 66% of the fund’s assets are linked to performance of the stocks of European, Middle Eastern and African companies.
The fund has received a five-star overall rating from Morningstar. The fund comes with no load fees and does not have a minimum investment requirement.
PIMCO Mortgage Opportunities Fund Class C
AUM: $2 billion
2012-2015 average annual return: 2.67%
Net expense ratio: 1.75%
Even though it was established in 2012, the PIMCO Mortgage Opportunities Fund Class C is already one of the best-performing mutual funds that invests in mortgage-related assets. About 40% of the fund’s assets are invested in commercial MBSs and non-agency MBSs. Agency debt issued by Freddie Mac, Fannie Mae and Ginnie Mae account for about 25% of the fund’s assets.
Due to strong outperformance of most of its peers within the non-traditional bond category, Morningstar gave the fund five stars for overall performance and a bronze analyst rating. The fund comes with a load fee of 1% and requires a $1,000 minimum investment. As of Nov. 30, 2015, the fund has a 30-day SEC yield of 2.14% and an effective duration of 2.06 years.
PIMCO Foreign Bond (U.S. Dollar-Hedged) Fund Class R
AUM: $8.1 billion
2010-2015 average annual return: 5.47%
Net expense ratio: 1.15%
The PIMCO Foreign Bond (U.S. Dollar-Hedged) Fund Class R is one of PIMCO’s flagship funds that lets investors obtain diversified exposure to foreign bonds. The fund invests in hedged non-U.S. fixed-income instruments with an intermediate maturity profile. About half of the fund’s assets are invested in investment-grade sovereign bonds issued primarily by Japan, France, the United Kingdom, Italy and Spain. The fund also allocates a portion of its assets to foreign corporate bonds and various asset-backed securities (ABSs).
As of Nov. 30, 2015, the fund had a 30-day SEC yield of 0.85% and an effective duration of 6.81 years. The fund has received a five-star overall rating and a bronze analyst rating from Morningstar. The fund comes with no load fees and has no minimum investment requirement.