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M*: The Long View Guest: Dan Ivascyn: Building A Portfolio To Bend But Not Break: (PONAX)

TedTed
edited September 12 in Fund Discussions
FYI: Our guest this week is Dan Ivascyn. Ivascyn is group chief investment officer of PIMCO, where he leads the firm's income, credit hedge fund, and mortgage opportunistic strategies and sits on its executive and investment committees. Ivascyn is perhaps best known as the longtime manager of PIMCO Income, where he's produced one of the best records of any bond manager since taking the helm in 2007. In 2013, Morningstar named Ivascyn as its Fixed-Income Fund Manager of the Year. Ivascyn has been in the investment business for nearly three decades. He joined PIMCO in 1998, following stints at Bear Stearns, T. Rowe Price, and Fidelity Investments.
Regards,
Ted
https://www.morningstar.com/articles/945312/dan-ivascyn-building-a-portfolio-to-bend-but-not-break

Comments

  • Worth listening to and a good overview of non agency rmbs and why the fundamentals remain so strong there.
  • Totally agree with Junkster. The PIMCO gang manages a hefty chunk of my portfolio.
  • edited September 11
    PONAX has an expense ratio of 1.45% and a 3.75% load.
  • No-load at Fidelity, Schwab, Vanguard and E-Trade.
  • edited September 12
    I'm thinking that Pimco Income Fund is held by a good number of MFO members. I own the A share version (PONAX) thus I have no wrap fee assessed on my account by my brokerage house. Also, I can do net asset value transfers into other Pimco A share funds (commission free) should I choose to do this.

    I enjoyed listening to what Mr. Ivascyn had to say about Pimco Income's portfolio construction and that it was geared for income generation over capital appreciation although capital appreciation was a secondary objective of the fund.

    I plan to buy more of this fund, on nav weakness, as I continue to expand the income area of my portfolio.
  • carew388 said:

    No-load at Fidelity, Schwab, Vanguard and E-Trade.

    also ML

  • No-load at Fidelity, Schwab, Vanguard and E-Trade.
    also ML
    Does anyone pay a load for any "load" fund anymore? I highly doubt it. The next class that should be eliminated is C-shares. Absolutely a rip-off.
  • I have been using PIMIX for some time, but this year it lags badly among the multi-sector bond funds. Also disappointing is that PIMCO raised all their expense ratios.
  • PIMCO held its management fee constant between 2018 and 2019, at 0.50% for I shares, and 0.65% for A shares. What changed was the amount of interest it paid. From the respective prospectuses:

    2018: "Other Expenses" include interest expense of 0.24%. Interest expense is borne by the Fund separately from the management fees paid to Pacific Investment Management Company LLC ("PIMCO"). Excluding interest expense, Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement are 0.50%, ..., 0.65%, ...

    2019: "Other Expenses" include interest expense of 0.55%. Interest expense is borne by the Fund separately from the management fees paid to Pacific Investment Management Company LLC ("PIMCO"). Excluding interest expense, Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement are 0.50%, ... 0.65%, ...

    Personally, I'm not fond of leveraging because I'm uncomfortable with the risk profile, which I don't fully understand. Naively, it's borrowing short to lend long, which can break down as the yield curve flattens. (I believe it's a lot more complicated based on the derivatives used, but this seems like a good starting point to think about leverage.)

    At the same time, the fund has limited interest rate risk by staying at very close to zero duration (under a year). While that reduces downside risk, it also reduces upside risk (impeding the benefit of falling rates). Which is in evidence now.

    Still, 3% below category average YTD (5.34% vs. 8.14%) and exactly average (6.68%) over the past year IMHO is not a disaster. Figures as of Sept. 12, 2019.
    https://news.morningstar.com/fund-category-returns/multisector-bond/$FOCA$MU.aspx

    Regarding fees, I'm bothered by the fact that PIMCO collects more in management fees for its A shares than for its I shares. I'm guessing that this is so that people can buy the A shares for "free" (NTF) in supermarkets. The money that the fund pays to the brokerages has to come from somewhere, and the 0.25% 12b-1 fee added to A shares may not cover the full amount that PIMCO pays. At least with the "other expenses", PIMCO is upfront in saying that it's going to pay interest on its investments.
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