PIMCO Mutual Funds

Unlike some of the other mutual funds we've reviewed, PIMCO Mutual Funds is focused on serving the institutional money manager.  You'll notice this difference later on, when we discuss minimum investments.  That does not mean individuals should ignore PIMCO funds; they should be very interested.  The returns on some of their funds are quite high.

The reason for including PIMCO in these reviews is because of the ability an investor has to buy into a PIMCO fund as part of a larger organization.  For example, the mutual fund offerings of PIMCO might be included as part of a 401k plan or 403b account.

PIMCO Family of Funds

PIMCO Funds Mutual Funds is part of the Pacific Investment Management Company, which claims to be one of the world's leading fixed income money managers.   This family of funds is a relative newcomer.  The history of the company dates back to 1971, when it started out with just $12 million in assets under management.   The company claims to have 1,484 employees in ten countries.  As of May 2011, PIMCO had over $1.2 trillion in assets under management.  So they've experienced very good growth over the past 40 years.

With its focus on the institutional money manager, the average investor may only be familiar with the PIMCO name when it appears as part of a larger fund.  Since the minimum investment on all PIMCO mutual funds is $5 million, most investors would participate in a fund as part of a larger pool of employees.  For example, an employee might be able to select a PIMCO fund as part of a 401k plan.

PIMCO Funds Fee Structure and Returns

Morningstar ratings indicate the expense ratio for mutual funds at PIMCO range from Below Average for their international stock funds (1.14%), to Average (1.02%) for their taxable bond fund.  The focus at PIMCO is clearly on taxable bond assets (85%) followed by domestic stock funds (6%).

The minimum investment for many PIMCO funds is a hefty $5 million.  This is clearly indicating the target client is the institutional investor.  PIMCO has somewhat of a balance when it comes to loads, with approximately 83% of the funds being no-load mutual funds.  As of the end of April 2011, the average return on a PIMCO fund was 7.58% over the last five years.

Top Rated PIMCO Mutual Funds

As was the case with OppenheimerFunds, some of the top-rated PIMCO mutual funds are bond funds. Fortunately, two of the funds are also no-load funds with very low expense ratios.  That means more of the investor's money is put to work earning returns. That being said, here is a list of the top performing mutual funds from PIMCO as of May 2011.

• PIMCO All Asset Instl. (PAAIX) - with over $21 billion in assets, this moderate allocation fund's focus is placing investments in other mutual funds from PIMCO.  The fund's top three holdings include PIMCO Fundamental Advantage Total Retirement Instl., PIMCO Unconstrained Bond Inst, and PIMCO Income Instl.  The minimum investment is $1 million.  The expense ratio of this fund is just 0.87%.  The average return over the last five years was 7.46%. (May 2011)
• PIMCO Fundamental IndexPLUS TR A (PIXAX) - with $389 million in assets, this large blend mutual fund's focus is on the basic materials and consumer cyclical sectors of the economy.  The top three holdings include cash and cash equivalents, U.S. Treasury Futures, and FNMA bonds (4.5%).  The fund carries a very low expense ratio of 1.19%, and a front load of 3.75%.  The minimum investment is just $1,000.  The fund's average return over the last five years was 8.78%. (May 2011)
• PIMCO Investment Grade Corp Bd Instl (PIGIX) - with $5.8 billion in assets, this is the largest of the three funds reviewed.  This intermediate term bond fund's focus is on U.S. corporate bonds with an average rating of BBB.  Interestingly, the fund only holds shares of PIMCO Investment Grade Corp Bond Instl.  The fund carries a relatively low expense ratio of 0.50%, and the minimum investment is $1 million.  The average return over the last five years for this mutual fund was 9.73%. (May 2011)

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