If investors are looking at the Diversified Bonds fund category, PIMCO Income Institutional (PIMIX) could be a potential option. PIMIX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
The world of Diversified Bonds funds is an area filled with options, such as PIMIX. Investors looking for exposure to a variety of fixed income types that stretch across issuers, maturities, and credit levels will find a good fit with Diversified Bonds funds. Typically, these funds have a solid amount of exposure to government debt, as well as modest holdings in the corporate bond market.
PIMCO Funds is responsible for PIMIX, and the company is based out of Newport Beach, CA. Since PIMCO Income Institutional made its debut in April of 2007, PIMIX has garnered more than $115.63 billion in assets. The fund’s current manager is a team of investment professionals.
Investors naturally seek funds with strong performance. PIMIX has a 5-year annualized total return of 4.37%, and it sits in the middle third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3-year annualized total return of 7.29%, which places it in the middle third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Over the past three years, PIMIX’s standard deviation comes in at 5.94%, compared to the category average of 12.71%. Looking at the past 5 years, the fund’s standard deviation is 5.48% compared to the category average of 12.24%. This makes the fund less volatile than its peers over the past half-decade.
Modified duration is a measure of a specific bond’s interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. PIMIX has a modified duration of 4.72, which suggests that the fund will decline 4.72% for every hundred-basis-point increase in interest rates.
We must remember to consider the fund’s average coupon, as income is traditionally a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund’s average coupon of 4.91% means that a $10,000 investment should result in a yearly payout of $491.
