FYI: Investors have gravitated to exchange-traded funds for a variety of reasons, including tax efficiency. Joining me to share some research on the tax efficiency of various fund types is Ben Johnson. He's director of global ETF research for Morningstar.
Regards,
Ted
https://www.morningstar.com/articles/941574/etf-or-traditional-index-fund-which-is-more-tax-efficient

@MFO Members: As a holder of Pimco Income Fund I admit the expensive is high, but what concerns me is the size of the fund $103.3 Billion. I beliece it's size has hurt performance over the last couple of years despite Dan Ivascyn's claim that it hasn't

Here's a chart comparing PIMIX's performance over the past two years with that of the average mult-sector bond, VMBSX (mortgage backed index fund), a couple more mortgage-backed bond funds, and VBLTX (IG bond index fund). It excludes August 2019, when as @mcmarasco points out, PIMIX had anomalous performance.
Comparison graph 8/13/2017- 8/1/2019
If fund size were a significant factor over the past couple of years, one would expect this graph to show lackluster performance. That's not how it appears to me.
Regarding the last eight trading days, this is a fund that uses all sorts of derivatives as well as basic leveraging. Leveraging alone has got to weigh heavily on performance.
The spread between the 3 month T-bill and the 30 year T-bond has gone from 37 basis points on Aug 1 (2.44% - 2.07%) to 14 basis points (2.14% - 2.00%) in just a few days. Versus the ten year, the spread has fallen from -17 basis points (10 year yielding less) to -35 basis points. Not quite as huge, but still rather dramatic.
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/TextView.aspx?data=yield
Look at the average duration of the fund's holdings. They range from a "high" of 2.14 years for securitized debt through virtually zero for IG and other gov debt (0 ± 0.5%) down to -2.35 years for foreign developed market debt.
https://www.pimco.com/en-us/investments/mutual-funds/income-fund/inst
This is a fund positioned for rising rates. It got caught flat footed. It happens, especially with funds that make macro calls. While size limits PIMCO funds' ability to trade on anything but macro movements, that's been true for decades. This is not a recent change because of growth in the past few years.

This says they were selling for $106.25. Seems like it should be more - but what do I know?
https://markets.businessinsider.com/bonds/7_375-the-hertz-bond-2021-us428040cg21

In a sense, people in the US already have a form of basic income. It's just that it's provided via a crazy quilt of programs. So much so that Milton Friedman proposed simplifying with his version, which he called a negative income tax. All variants on the same theme - ensure everyone has at least a certain income level, and use taxes to fund.
https://www.vox.com/2014/9/8/6003359/basic-income-negative-income-tax-questions-explain
https://www.nytimes.com/2006/11/23/business/23scene.html

IMHO this is not a big surprise. ABSs tend to have negative convexity and do not respond well to sharp drops in interest rates. Since May, when the 10 year Treasury was still fluttering around 2.4%, the 10 year yield has plummeted to 1.56% today (8/12/19).
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2019
Mortgage and other asset-backed bond funds have responded predictably. Check out, e.g. VMBSX, FMBPX, FMSFX, all vs. VBTLX.
Here's a three month plot from M*.
Sure, between Aug 1 and Aug 5, PIMIX did significantly worse than its ABS peers, but I'd be more concerned about the broader trend of this kind of fund. (Of course, with PIMCO one is never quite sure of what it is doing; that adds another level risk/reward.)
See my post from April 2018:
https://mutualfundobserver.com/discuss/discussion/comment/100394/#Comment_100394

@ET91 -- not fair to directly compare Bruce Berkowtize and Miller to Royce, I don't think.
Bruce just began drinking his own bathwater -- made bizarre moves with regard to fund staff and friendships, and wanted to grow that sucker and was on TV all the time. Sadly, despite his much-noted ability to understand investor foibles (honed while running book as a lad in Boston, we were reminded all the time !), his own ego got in the way. I hold FAIRX for a long time -- across the entire span of my holding period I ended up doing about as well as I would have had I held a solid fixed income fund. I would have made out quite well if I had bailed when Bruce's media exposure began to double. Perhaps the Fairholme Foundation is doing good work.
Miller just doubled down until he went bankrupt.
But with Royce, it was always all about the fees and putting old wine into lots and lots of different bottles, of various sizes and shapes. Royce also had a tendency to creep into international stocks while still benchmarking their funds to the US market. I always appreciated their honesty there. These organizing principle only got worse under LM. In recent year Royce/LM expanded the number of share classes and fund offerings (look at Dreyfus' gem of a fund for example -- special equity is going great guns; let's duplicate it and get Charlie in the press some more !). Royce renamed and closed / merged some poor performers, LM shoved some of their own managers onto the roster, and some of Royce's lackluster managers were retained (while Whitney George left?) and the records of these poor managers hidden from view. George Nekov, Chip Skinner, etc -- but look carefully -- Royce never publishes their historical records; or only selectively features them in fund reporting (this quarter yes, next quarter no). Next up at Royce -- the slow transition from star (Dreyfus, Zaino) managers to newcomers. When will they take Chuck after the 375 or so funds he manages? Trend chasing is perhaps excusable to some extent; the other stuff is not and really indicates to me that they aren't acting as a true fiduciary. I have found them really hard to trust them for some time.

I’m more concerned with its performance lately. It has been sucking wind. Pimco must be shorting treasuries or something because it’s been dropping on days when the general bond market is up. Down 0.5% today alone!

Silicone Valley tycoons "believe" in the free money because it shuts off talk about alternatives, and leave their wallets bulging. If tech & AI specifically, are going to cause increasing disruption of the job markets, one answer is to tax AI and slow it down.
Commercial replacement of human by 'droids', can certainly be regulated, by taxing it. (Tech execs certainly wouldn't like this alternative. I don't care!). How? Example: Your local grocer or retailer likely already has "self-checkout" scanning units. The Govt could require registration of all such units (failure to register would result in crushing fines). The registered droid (and future droids) would no longer be a deductible or depreciable asset for tax purposes. Moreover, the IRS would require the owner of the droid to impute income for tax purposes (income- and payroll-taxes). The droid's owner would be required to send the tax on the imputed income to IRS. Taxes remitted on behalf of the droid would also NOT be tax-deductible. This taxing protocol could be implemented to include those annoying automated answering machines too.
Basically, rather than the US Treasury subsidizing droids, they treat them as taxable "persons" -- and disallow businesses from deducting any costs associated with them.
Should droids enjoy a more favorable tax rate than human? I think NOT!!
Even if every business owner continues to layoff humans in favor of droids, at least the droids' taxes would fund a lot of benefits for current and former human employees.

Many of the people who believe in Basic Guaranteed Income like the Freedom Dividend are from silicon valley’s tech sector. They believe because they realize what’s happening. By one estimate 50% of American jobs will soon be replaceable with technology and not enough new jobs will be created to take their place. So let’s say we eventually hit 20% unemployment because of that. What do you think America will look like then without a Freedom Dividend? Perhaps if Yang included a tech tax with the Freedom Dividend to pay for it it would be more acceptable to you.

@JohnN: Sorry John, but I don't call losing sixteen months of interest at 7.375% nice. I'm not complaining, bought the bond on7/19/17 at little less than par, so the capital appreciation plus a excellent yields was a win-win. Now I'll have to put the proceeds to work at a lot less the 7.375%
Regards,
Ted

@MFO Members: Today Hertz called in the chips on my HTZ 7.375% bond maturing 1/15/21. This is the downside of having a callable bond, and a by-product of much lower interest rates.
Regards,
Ted

FYI: The market has a Clark Kent these days, it’s low-volatility stocks: Beneath their dull facade lies a superhero defying mortal pressures.
Leuthold’s director of research and equities, Scott Opsal, made that comparison in a post on Friday. He argued that while low-volatility stocks are richly valued, they’re benefiting from strong investor momentum, falling interest rates, and investors’ ongoing demand for safety.
Regards,
Ted
https://www.barrons.com/articles/low-volatility-stocks-etfs-51565377446?mod=md_mf_news

FYI: U.S. stock index futures were higher Monday morning, after China’s central bank set the official midpoint reference for the yuan at a stronger-than-expected level.
On Monday, the People’s Bank of China (PBOC) set its daily midpoint for yuan trading — which determines the limits for its onshore movement — at 7.0211 per dollar. That was weaker than Friday’s session, but beat market expectations.
On the data front, the Federal Budget for July is expected to be published at around 2:00 p.m. ET.
In corporate news, Sysco and Barrick Gold are both expected to publish quarterly earnings before the opening bell.
Bloom Energy and Tencent Music will report their latest results after market close.
Stocks across the globe rallied Monday, with Chinese markets advancing by the most in over a month, following a roller-coaster week in which U.S.-China trade tensions shook asset prices across the board.
The Shanghai Composite Index climbed 1.5% after the Chinese central bank set the yuan at a stronger rate than traders had expected—7.0211 to the dollar—easing concerns of a quick devaluation after President Trump last week accused China of manipulating its currency.
The benchmark Stoxx Europe 600 index gained 0.9%, led by a 1% advance in Germany’s DAX.
The positive turn in markets comes despite fresh gloom around U.S.-China trade talks, with Mr. Trump on Friday suggesting that negotiations could break off.
Among the biggest gainers in Europe was Tullow Oil , TUWOY 2.75% whose shares rose 17% after the company said it had found more oil off the coast of Guyana. Shares in ams AG AMS -8.70% , a 3-D sensor maker that supplies to Apple, dropped 9% on reports that the Austrian company has put in a bid to take over German lighting company Osram Licht , creating a bidding war with private-equity buyers. Shares in Osram were up 10% early Monday.
In Asia, amid a day of light trading with a number of regional exchanges closed, Cathay Pacific fell 4.5%, putting the Hong Kong airline on course to close at its lowest level in more than a decade. China’s aviation authority on Friday ordered the carrier to remove all employees involved in the protests in Hong Kong from flights to mainland China. The most closely watched class of shares in Swire Pacific, the Hong Kong conglomerate that is Cathay’s largest shareholder, fell nearly 6%.
This week, investors will be watching for new consumer price inflation estimates from the U.S. on Tuesday after the U.S. Federal Reserve cited subdued inflation as one reason for cutting rates last week. Consumer prices increased 0.1% between May and June.
Regards,
Ted
WSJ:
https://www.wsj.com/articles/global-stocks-jump-led-by-china-rebound-11565599208
Bloomberg
https://www.bloomberg.com/news/articles/2019-08-11/stocks-to-dip-after-u-s-drop-as-caution-reigns-markets-wrap?srnd=premium
IBD:
https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-apple-stock-amd-lockheed-amazon-zscaler-stock-market-correction/
CNBC:
https://www.cnbc.com/2019/08/12/stock-market-wall-street-in-focus-after-china-fixes-yuan-at-stronger-than-expected-level.html
U.K.
https://uk.reuters.com/article/uk-britain-stocks/uk-shares-gain-broadly-thomas-cook-tanks-idUKKCN1V20J8
Europe:
https://www.reuters.com/article/us-europe-stocks/european-shares-rebound-ams-bid-for-osram-puts-ma-in-focus-idUSKCN1V20K5
Asia:
https://www.marketwatch.com/story/asian-markets-make-cautious-gains-following-rocky-week-2019-08-11/print
Bonds:
https://www.cnbc.com/2019/08/12/us-bonds-treasury-yields-tick-lower-amid-trade-war-concerns.html
Currencies:
https://www.cnbc.com/2019/08/12/forex-markets-us-china-trade-concerns-remain.html
Oil:
https://www.cnbc.com/2019/08/12/oil-markets-demand-outlook-us-china-trade-war-in-focus.html
Gold:
https://www.cnbc.com/2019/08/12/gold-market-trade-tensions-and-recession-worries-linger.html
Cuirrent Futures:
https://finviz.com/futures.ashx

Much of the difference is in how much borrowing the funds do. PTTAX pays 0.25% in interest expenses, while PONAX pays 0.55%. I assume this is borrowing is for the purpose of leverage. Under "Leveraging Risk" the prospectus reads:
"to the extent a Fund borrows money, interest costs on such borrowings may not be recovered by any appreciation of the securities purchased with the borrowed amounts"
The remaining 10 basis point difference in ERs is in the management fee, 0.65% vs 0.55%. You can eliminate the 0.25% 12b-1 fee and also cut the management fees to 0.50% and 0.46% respectively (just a 4 basis point difference) by buying the institutional class shares (with a brokerage transaction fee).
The current rate of interest (low yield environment) isn't as important as the spread between short term and long term rates when it comes to making money by leveraging fixed income securities. What matters is that you make more on the securities you buy than you pay in interest for the cash to buy those securities.

See: https://mutualfundobserver.com/discuss/discussion/51839/fidelity-draws-adviser-wrath-with-1-9-cash-offer

@edmond: Nice work. I enjoyed reading your analysis. Please keep posting your thoughts. In converting Old_Skeet's market barometer to score AGG (bonds) this can be done; but, instead of using the earnings feed which I use for stocks I used a yield feed along with a breadth technical score measure (over a physical count measure) plus a technical score feed. With this, based upon these metrics, the barometer produced a reading of 125 indicating that bonds are extremely overbought.
In comparison, based upon the last barometer reading for the S&P 500 Index, stocks came in with a reading of 157 indicating that they were under valued.

Spending this afternoon looking at some long-term stock & equity-index charts. Just thought I'd jot down some impressions.. Just thought I'd memorialize some thoughts, for my own benefit as much as anyone else's...
Bonds (AGG) - At $112.xx, bonds appear to be at major L/T resistance, having reached this area in 2013, 2015 & 2017, only to then turn back down... Nothing prohibits a continued move up, but MAN, the YTD move has been a rocket. Nothing grows to the sky.
S&P index: Broke out past resistance in July, north of the mid-2900's. Then promptly fell back. (i.e. so far, could not hold the breakout). July is seasonally a strong equity month (and that is what we saw this year). Aug & Sept (& Oct), often give back a lot of points. Looking 'below the surface' of the index, here is how I interpret l/t charts of some of the larger stocks:
***For the optimists out there, I suppose you could replace the word "topping" with "consolidating prior gains, awaiting the next leg up".
CONSUMER DISCRETIONARY
AMZN 22% of XLY -- L/T topping? ***
HD 10% of HLY - L/T topping? ***
MCD 7.5% of HLY - No resistance, but PE 29. (while S&P categorizes MCD as 'discretionary', I view it as 'the poor man's kitchen' (i.e. a consumer staple).
COMMUNICATIONS
GOOG /-L 24% of XLC – L/T topping? ***
FB 19.5% of XLC - - L/T topping? ***
TECHNOLOGY
MSFT 20% of XLK - No resistance. But extended?
AAPL 16.5% of XLK - L/T topping? ***
FINANCE
BRK.B 12.2% of XLF - L/T topping? ***
JPM 11% of XLF - L/T topping? ***
INDUSTRIAL
BA 7.9% of XLI - L/T topping? ***
HON 5.5 of XLI - only possible s/t topping
UTX 4.7% OF xlI -L/T topping? ***
DJT -- L/T topping. 2019 highs are below 2018 highs.
In most cases, as I write this, the stocks are not at "the top" (i.e. all time highs), but they do appear to be range-bound, somewhere between their high, and what might be deemed "support", technically speaking. As CNBC technician Randall Carlson likes to say "topping is a PROCESS, not a (single-) price".
Disclosure: As time was limited, I didn't view the Utes, or Materials (each ~ 3% of the index), or Energy & Healhtcare -- each of those seems to mostly move to their own tune, rather than general economic conditions.
Meanwhile:
World equities-EX-US (IXUS): These peaked in January 2018, then nosedived through 2018. Then rebounded in 2019 to $60.xx but turned back down. $59-$60 seems to have become the new resistance level.
European markets, removing the FX effects (HEDJ) seems absolutely refusing to breach a line of resistance in $66-67 area. Its tried and failed 7 times in the past 5 years to do so, including in July... How healthy can ANY equity market be, if it supported by interest-rate suppression like what we see there...? The UK (EWU) appears to be at/near support -- presumably the market is being avoided as we approach Brexit. Might be persuaded to dab a toe in here..?
Japan (DXJ, hedged for FX) -- I always find it hard to "read" the Japanese market technically. I can only say that in mid-August 2019, it certainly cannot be said to be in a bullish uptrend..
China (FXI)... Strangely, FXI seems to be "at support" ~ $38.xx. -- Off about 28% from its recent (early 2018) highs.
India (INDA). Another market that I find hard to "read" --- volatility is often intense/sudden, both up and down. That said, with the exception of a "blow-off top" in January 2018, $35-36 seems like rather dogged resistance. I'd be surprised if it broke above it
Gold (IAU) - Could definitely use a rest (i.e. pullback) after recent sudden move up. But, what I see is:a) higher-lows since the late 2016 low, b) successful breach through the intermediate-term line of resistance at $13.xx price area, and from a fundamental standpoint, any significant currency dislocations (e.g. US, China, UK or Europe) OR geo-political conflict (Persian Gulf, or more acutely, Kashmir) could return IAU to the 2012-2013 resistance area (or beyond)...
TAKEAWAYS: Bonds look extremely stretched/overbought. Foreign markets have not overcome their January 2018 highs, despite an enormous "up move" in H1-2019. In many cases, major growth stocks in the S&P, seem to be slightly under lines of price resistance -- suggesting at least a modest move up toward resistance is in the realm of the possible. However, much of the market does appear to be in a trading range, suggesting any move up will not have "legs" and may well be turned back as prices move into their zones of resistance. Risk/reward doesn't strike me as particularly attractive.

Ed Yardeni has been around Wall Street for decades. -- Maybe even back as far as the old Wall Street Week era. Having been around a long time, he brings experience, sobriety, and perspective to his analysis, which is often lacking by most of today's professional "blogsters".
I 'check in' on his blog from time-to-time. This week's post (dated 8/5/19) seem particularly cogent, and covers a lot of ground about markets, the national economy, "stagnant income" (he thinks the data shows income has NOT been static), and much more.
blog.yardeni.com

I just noticed that the expense ratio for PIMCO income A is 1.45%. I realize that they are trying to slow down inflows (I think that this correct), however, 1.45% is too much. Assets are at $130 billions as of August 11, 2019. On the other hand, expense ratio for PIMCO total return A are 1.05%. Not sure how much outperformance PIMCO income can accomplish in the future with a 1.45% expense ratio in a low yield environment.

Many of the people who believe in Basic Guaranteed Income like the Freedom Dividend are from silicon valley’s tech sector. They believe because they realize what’s happening. By one estimate 50% of American jobs will soon be replaceable with technology and not enough new jobs will be created to take their place. So let’s say we eventually hit 20% unemployment because of that. What do you think America will look like then without a Freedom Dividend? Perhaps if Yang included a tech tax with the Freedom Dividend to pay for it it would be more acceptable to you.