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PIMCO Fixed Income or Bond Closed End Funds CEF | Taxable and Muni

Updated on October 27, 2011
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Fixed Income Intro

Investing always involves risk. All investments present a balance between risk and potential return. As we know, the safest investment can be done only through bank such as saving account, checking account, and Certificate of Deposit (CD). Your money will be guaranteed by your bank through FDIC insurance (up to $250,000 per account) and some of these accounts do pay an interest rate. Currently, the interest rate is very low (APR<0.60%). Most of the well known banks such as Bank of America or JPMorgan Chase only pay 0.10% interest rate per year.

Investing in Bond

The next type of investing is investing in Fixed Income, also known as Bond. The rule of thumb in bond investment is Higher Risks is equal to Higher Yields. Many people especially near retirement or retiree have invested in fixed income or bond. Fixed income investment can be done through several medium such as individual bond, mutual funds, exchange traded funds (ETF), closed end funds (CEF). Although, there is a risk in investing in bond fund, the investment risk is lower than investing in stock or equities. The only risk in fixed income investment is the company may default on its bond. This may cost investor its investment capital, though it is very rare especially in investment grade bond fund investment.


Why invest in Bonds?

Several reasons to invest in fixed incomes or bonds are:

  1. Bonds pay a fixed rate of interest income or distribution yield over time either monthly and/or quarterly. This can be very useful especially for retired people or near retirement people who need regular income to support their living style. Some of the bonds fund may even paid more regularly than any stock or equity fund.
  2. The bond value volatility is lower than any stock value. Investing in fixed income or bond can be done easily than stock investment. Investors only need to know some basic information about the bonds such as maturity, credit quality, expense, commission and etc.
  3. Fixed incomes carry the promise of their issuer to return the face value of the security to investor at maturity; stocks value may go up or down at any time.

Why Closed End Funds?

Unlike mutual funds, Closed End Funds (CEFs) are traded like a stock. An investor or trader may need a brokerage to trade CEF. Sometimes, there is also a discount opportunity to invest in these funds since the funds may trade below its net asset value (NAV). The list includes taxable fixed income and non taxable fixed income funds (or municipal bond fund). The data are compiled from cefa, cefconnect and closed-endfunds websites.

PIMCO CEFs

In this article, I’ll focus on fixed income investment in PIMCO closed end funds. This list include taxable bonds fund and municipal bond fund. Taxable bonds include corporate bond, government bond, multisector bond, and junk bond or high yield bond. Pacific Investment Management Company, also known as PIMCO, is a well known global investment management company focus on bond or fixed income investment. PIMCO is a unit of Munich-based insurer Allianz SE and is part of Allianz Global Investors Fund Management.

PIMCO also has 2 very well known Chief Investment Officers (CIO), Bill Gross and Mohamed El-Erian. Bill Gross or William H. Gross is the well known bond guru who also runs PIMCO's $252.2 billion Total Return Fund. The Pimco Total Return Fund has consistently outperformed the index as well as its competitor.


Popular PIMCO CEFs

A. PIMCO Global StocksPLUS & Income

PIMCO Global StocksPLUS & Income fund seeks current income total return and long term capital appreciation through investment in equity index derivative instruments. The indices are based on the S&P500 and MSCI EAFE Indices. It may use an options strategy to achieve its goal. This CEF is part of Allianz Global Investors Fund Management offerings. The fund manager is Daniel J Ivascyn since 2005. The Top 5 sectors of this fund are Non-Captive Consumer Finance, Non-Captive Diversified Finance, Banks, Insurance Life and Health Care. It has 95% of country allocation in USA market. There are 320 bonds in its holding currently. The total expense is 2.88% per year which include 2.30% baseline expense and 0.57% interest expense. As of January 8 2011, the fund sells at 55.72% premium from its NAV.

B. PIMCO Corporate Income

The PIMCO Corporate Income Fund objective is to invest in corporate debt obligations and other corporate income producing securities to provide high current income with capital appreciation. The fund manager is Mark Kiesel (2005) and Bill Gross since 2009. The Top 5 sectors of this fund are Bank, Non-Captive Consumer Finance, Insurance Life, Other, and Non-Captive Diversified Finance. It has 71.97% of country allocation in global bond market and 27.35% of asset in USA bond market. There are 306 bonds in its holding currently. The total expense is 1.52% per year which includes 1.47% baseline expense and 0.04% interest expense. As of January 8 2011, the fund sells at 3.06% premium from its NAV.


C. PIMCO High Income Fund

The PIMCO High Income Fund investment objective is to provide high current income with capital appreciation through investment in corporate debt obligations and income producing debt securities. This I one of the largest PIMCO closed end funds with asset of 1.55 Billion. The fund manager is Bill Gross since 2009. The Top 5 sectors of this fund are Non-Captive Consumer Finance, Miscellaneous, Insurance Life, Banks, and Electric Utility. It has 100.00% of asset in USA bond debt market. There are 338 bonds in its holding currently. The total expense is 1.24% per year which includes 1.14% baseline expense and 0.10% interest expense. As of January 8 2011, the fund sells at 39.59% premium from its NAV.

D. PIMCO Municipal Income

The PIMCO Municipal Income Fund seeks to provide current income exempt from federal income tax. Under normal market settings, the PIMCO Municipal Income Fund expects to be fully invested (>90% of asset) in a portfolio of municipal bonds the interest from which is exempt from federal income taxes. This bond fund distribution is tax free or tax exempt from federal income tax. This CEF is part of Allianz Global Investors Fund Management offerings. The fund manager is John Cummings since 2008. The top 5 sectors are Hospital Revenue, Tobacco, Industrial Development / Pollution control, State/Local government and Special Tax. The top 5 state municipals are Texas, California, Pennsylvania, Louisiana and New Jersey. There are 173 bonds in its holding currently. The total expense is 1.46% per year which is high and it currently sells at premium from its NAV.


Disclosure: I have no affiliation with any of these funds. I also have no position in these funds. Please do your own research for additional details. Please trade and invest responsibly. Past Performance is No Guarantee of Future Results.


Complete List PIMCO Closed End Funds

(click column header to sort results)
Fund Name  
Ticker  
Type  
Yield  
Mkt Cap (M)  
Base. Expense  
1Yr Rtn  
Eff Leverage  
Prm / Disc  
Closing Price  
PIMCO Global StocksPLUS & Inc
PGP
Multi-Sector Bond
9.68%
$230
2.30%
37.09%
44.84%
55.72%
$22.72
PIMCO Income Opportunity
PKO
Multi-Sector Bond
8.26%
$374
1.40%
30.00%
44.87%
-1.61%
$25.71
PIMCO Income Strategy Fund
PFL
Multi-Sector Bond
7.81%
$285
1.42%
22.33%
29.06%
3.78%
$11.52
PIMCO Income Strategy Fund II
PFN
Multi-Sector Bond
7.86%
$575
1.35%
18.07%
28.04%
0.10%
$9.92
PIMCO Corporate Income
PCN
Investment Grade Bond
8.24%
$579
1.47%
22.25%
36.49%
3.06%
$15.47
PIMCO Corporate Opportunity
PTY
Investment Grade Bond
8.17%
$1,140
1.20%
31.68%
31.69%
4.97%
$16.90
PCM Fund
PCM
Mortgage Bond
8.97%
$122
1.67%
45.93%
44.24%
7.21%
$10.70
PIMCO High Income Fund
PHK
High Yield Bond
11.36%
$1,552
1.14%
28.04%
28.48%
39.59%
$12.87
PIMCO Strategic Global Govt
RCS
Non-US / Global Income
8.72%
$406
1.04%
13.97%
51.04%
4.88%
$10.32
PIMCO Municipal Income
PMF
Municipal Bond National
7.80%
$314
1.34%
6.85%
45.88%
17.26%
$12.50
PIMCO Municipal Income II
PML
Municipal Bond National
7.84%
$598
1.25%
1.05%
43.79%
2.05%
$9.95
PIMCO Municipal Income III
PMX
Municipal Bond National
8.02%
$337
1.44%
7.52%
47.07%
17.89%
$10.48
PIMCO CA Municipal Income
PCQ
Municipal California
7.76%
$218
1.34%
1.65%
48.30%
5.31%
$11.90
PIMCO CA Municipal Income II
PCK
Municipal California
8.66%
$270
1.34%
6.06%
50.50%
22.49%
$8.66
PIMCO CA Municipal Income III
PZC
Municipal California
8.05%
$195
1.47%
4.32%
46.91%
8.62%
$8.95
PIMCO NY Municipal Income
PNF
Municipal New York
6.77%
$77
1.41%
2.76%
44.32%
1.61%
$10.10
PIMCO NY Municipal Income II
PNI
Municipal New York
7.52%
$114
1.43%
1.91%
46.33%
6.77%
$10.57
PIMCO NY Municipal Income III
PYN
Municipal New York
7.40%
$48
1.72%
1.36%
45.77%
3.03%
$8.51

Comments

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    • chan0512 profile imageAUTHOR

      chan0512 

      7 years ago from Camarillo, CA

      Simone, Thanks for your kind words. It is always my pleasure if I can help. More to come about PIMCO funds for investment.

    • Simone Smith profile image

      Simone Haruko Smith 

      7 years ago from San Francisco

      Very cool! Thanks for the summaries and helpful table - I've learned a bunch from this Hub!

    • chan0512 profile imageAUTHOR

      chan0512 

      7 years ago from Camarillo, CA

      Thanks again Lilly... You are so kind. More great information about PIMCO Closed End Funds in near future.

    • LillyGrillzit profile image

      Lori J Latimer 

      7 years ago from The River Valley, Arkansas

      A very well built Hub filled with excellent financial information. I bookmarked this. Thanks. And liked on FB

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