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 Unlike some of the other mutual funds we've reviewed, PIMCO Mutual Funds is focused on serving the institutional money manager. You'll notice that later on when we discuss minimum investments. That does not mean that individuals shouldn't be interested in PIMCO funds because they should be - the returns on some of their funds are quite high.
We're just recognizing the fact that the average investor will need to buy into a PIMCO fund as part of a larger organization. For example, the mutual fund might be offered 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 dating back to 1971 when it started with just $12 million in assets under management. As of November 2007, PIMCO had over $720 billion in assets under management - so they've experienced some pretty good growth over the last 36 years or so.
With its focus on the institutional money manager, the average investor may only be familiar with the PIMCO name as 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 - such as would be the case with a 401k plan.
PIMCO Funds Fee Structure and Returns
Morningstar ratings indicate that the expense ratio for mutual funds at PIMCO range from below average for domestic stock funds (1.21%) to average (1.01%) for their taxable bond fund. The focus at PIMCO is clearly on taxable bond assets (85%) followed by domestic stock funds (7%).
The minimum investment for all PIMCO funds is a hefty $5 million clearly indicating that 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 November 2007, the average return on a PIMCO fund was 6.04% over the last five years.
Top Rated PIMCO Mutual Funds
As was the case with Oppenheimer Funds, all of the top-rated PIMCO mutual funds are bond funds. Fortunately, all three of these 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 November 2007.
- PIMCO Investment Grade Corporate Bond Institutional (PIGIX) - with just $82 million in assets, this is a relatively small fund with 88% of the assets invested in bonds carrying a BBB bond rating or higher. The funds larger holdings include Eurodollar (Futures), US Treasury Bonds (Futures) and FNMA 5.5%. The expense ratio of this fund is just 0.50%. The average return over the last five years is 6.34%.
- PIMCO GNMA Instl (PDMIX) - with $357 million in assets this bond fund invests primarily in AAA rated bonds (99%). Top holdings include offerings from both GNMA as well as FNMA. The fund carries a very low expense ratio of 0.50% and the average return over the last five years is 4.79%.
- PIMCO Total Return Mortgage Institutional (PTRIX) - with $617 million in assets this is the largest of the three funds reviewed. The funds focus is on mortgage bonds from Fannie Mae and that is evident when looking at the top three holdings - FNMA 5.5% bonds, FNMA 5% bonds and FHLMC bonds (5%). The fund carries a relatively now expense ratio of 0.50% and as was the case with all these funds, the minimum investment is $5 million. The average return over the last five years for this mutual fund is 4.97%.
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