PIMCO

PIMCO Australian Bond Fund APIR: ETL0015AU

This product is a wholesale income fund managed by Pimco. Like the Henderson fund, the Pimco bond fund has quarterly distributions and is benchmarked to the Bloomberg AusBond Composite 0+ year index. The fund’s objective is to achieve total maximum return by investing in fixed interest securities predominantly denominated in Australian or New Zealand currencies, and to seek to preserve through capital and prudent investment management (Product Disclosure Statement, p. 5).

This fund distributes all net capital gains at the end of the financial year, in addition to fund income. This can be seen the graph below: the fund net asset value (NAV) climbs until each distribution and then drops back again.

pimco-graph

Data Source: Pimco. Chart: The Constant Investor.

The fund holds cash and fixed interest securities mostly in Australian denomination, but may hold some foreign denominated assets hedged back to the Australian dollar. The fund is rated five stars overall by Morningstar.

Fund documents give current returns at 6.44% at three years, 6.37% at five years, net of fees. Fees are 0.5% p.a. of NAV and there is a sell-spread of 0.1% on exit. The fund currently has $2.6 billion under management at the time of writing. The fund duration is currently sitting at 4.64 years, compared to the benchmark index duration of 4.93 years.

The same macroeconomic and market forces affecting the Henderson Australian Fixed Interest fund apply to the PIMCO fund as well, see here for a discussion of details, risk and a comparison between the two funds.

The fund is classed as wholesale and the minimum investment is $20 000. The fund is a fairly liquid asset: the product disclosure statement undertakes to allow investors to access their investment within seven days of a withdrawal request. However, this is not a guarantee and in certain circumstance the fund may not honour that request, you should make sure you understand those circumstances before considering an investment. There is a sell spread of 0.1%. The minimum balance you may be required to maintain in the fund is $20 000.

Unlike a term deposit, the fund does not guarantee the repayment of capital, a certain level of return or liquidity and you should be aware of the consequences of this when making your investment decisions.

You can find information about the Pimco Australian Bond Fund here and Morningstar has a report on the fund here.