PIMCO Total Return Fund Performance Report – Feb 2012

PIMCO Total Return Fund(February) The Performance of the PIMCO Total Return Fund has been good over the last year, rising in value almost 7%. This does not include any interest payments made over that time, which would drive the total return to around 10%. In January, the fund was yielding 3.0% on annualized basis.

Term (using Feb 13, 2012 as the start)

Performance

Last 30 Days

+1.32%

Last 90 Days

+3.60

Last  Year

+6.82

The PIMCO Total Return Fund did better than 80% of similar funds over the last month and three-month time periods. Over the last year, the fund did 1.69% worse than average fund in its Morningstar category.

 

In January, there were major changes made to the fund’s portfolio in terms of maturity dates and type of bonds.

The funds sold bonds maturing in less than 3 years and over 10 years. Now, 84% of the portfolio has a maturity date between 3 and 10 years, with the average maturity at the end of January being lowered to 8.3 years. The portfolio still has an average  maturity that is higher than its benchmark, which is 4.9 years. In other words, the fund thinks it will outperform its peers by owning  on bonds with maturities on average 3 years longer the benchmark.
Also, the fund significantly changed the type of bonds it holds. Its increased its holdings of Treasuries by 8% to 38% of the portfolio, and decreased its holdings of non-US developed nations bonds by a similar amount.  These bonds went from 18% of the portfolio to only 11%. In the funds report, it said it was selling off its European bonds. The fund believes that the US is a much better market than Europe at the moment for fixed income investing.
The fund provided detailed notes on its performance in January, in which it beat its benchmark (The Barclays Capital US Aggregate Index):

Positive Contributors:

  • Holding longer maturity dates than the Index average.
  • Holding more financial corporate bonds than the Index average.
  • Holding more Mortgage Backed Securities than the Index average

Negative Contributors:

  • Not having many holdings that benefited a rising Euro
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