PDI is a Closed End Income Fund offered through Pimco. With its recent discount to NAV I was looking for comments on the difference between PDI to PIMIX (PONDX). Looks like the ER is around 1%. It has outperfromed PIMIX (PONDX) long term, but under performing right now. Is it a different animal? I like the management and the performance of PONDX and wonder if this is a good time to pair PONDX with PDI.
Since I already own PONDX, My thought is taking a portion and exposing it to PDI at this point in time might provide me with exposure to both PONDX and PDI pairing these two investments much like is described in this article:
the-leveraged-income-and-alpha-strategy-part-3
Comments
I must emphasize that I am not an expert in bonds, so I would encourage others to comment.
BWG
I'm attracted to the current discount but I'm also very wary of it, as seen by yesterday's NAV price action (-1.15%) and PDI's price (+0.88) that quickly closed the discount by 2.03%.
I'm afraid PDI's NAV will catch up (or more literally, down) with the depressed PDI price, therefore not producing the desired 'alpha' that most CEF investors desire when a fund trades at a large discount.
But I'm watching PDI very carefully as well, especially it's chart, which is absolutely sick right now.
http://stockcharts.com/freecharts/gallery.html?pdi
Mike_E
ps: for full disclosure, i have been holding pdi ever since its ipo premium disappeared.
portfolio diversification but if you like volatility and more excitement PDI will give it to you.
Hey Andrei,
Another big drop today for PDI. Down 2.3% as of 2:30 pm est. Will be interesting to see how much of a drop PIMIX experiences. Looks like a 5% diiferential between PIMIX(PONDX) and PDI. Monitoring and keeping this strategy option on the table.
http://www.bloomberg.com/quote/XPDIX:US
Either this downward move in PDI is portending a decline in the NAV of PDI or someone holding PDI is panicking/going bust.
According to David Schawel (https://twitter.com/DavidSchawel), "it's leveraged non-agency MBS. Underlying bonds down 5% while fund down 10% on top of that. Not selling dollars for 90cents." He has been bullish on PDI in the past. Here is an older blog post by him on non-directional fixed income investing
http://blogs.cfainstitute.org/insideinvesting/2012/08/27/non-directional-fixed-income-investing-strategies/
The trading volumes on PDI are above average. There is some talk on Twitter of an mREIT in trouble/liquidating. I am not sure if mREITs can hold CEF's but could that explain the price drop on PDI?
I am long PDI
BWG