The PIMCO Total Return Class A (MUTF: PTTAX) is a bond-focused fund run by mutual fund icon William “Bill” H. Gross. Bill Gross and this PIMCO fund have the goal of providing mutual fund investors with the maximum possible return through a diversified portfolio of corporate and government bonds.
The PIMCO Total Return fund invests primarily in investment grade corporate and government bonds of varying maturities. The fund may also invest in high yield junk bonds and derivatives securities such as options, futures contracts, swap agreements and mortgage backed assets, which contribute to the fund’s volatile performance. The fund may be suitable for investors who are tired of low interest rates, but don’t want the risks associated with buying stocks.
Here are the specifics for the PIMCO Total Return fund for today’s mutual fund spotlight:
Investing Strategy: All of the fund’s assets currently are invested in fixed incomes. But the fund actually has a negative cash reserve of 40.5% right now because the manager is shorting bonds. Bill Gross believes bond interest rates will rise and push down their purchasing price, which allows buyers to get the bond and returns on the cheap.
Expense Ratio: With its 0.91% expense ratio and heavy front end load fee of 3.75%, PIMCO Total Return is expensive. But when you’re a Wall Street icon like Bill Gross, managing a fund can command a higher cost due to your star power. That said, although PRIMCO Total Return Cl A carries Morningstar rating of 4 stars, there are cheaper and better performing funds in the category if you want to shop around for a less glamorous bond mutual fund investment.
Top 5 Holdings: The top stocks in the PRIMCO Total Return CL A fund include Pimco Fds Private Account Portfolio Ser at 10.95% , FNMA 4.5%, TBA at 8.35%, FNMA 5% TBA at 6.10%, FNMA at 3.64%, US Long Bond Treasury Futures Index at 3.37%
Returns: The Pimco Total Return Fund’s 12-month return is slightly in the red while the broader market is up nearly 24%. Its 7.8% 5-year return also underperformed the Dow Jones Industrial Averages’ 11% return, but beat the S&P 500’s 5% return during the period.
Other Fund Statistics
- Total Assets: $240.7 billion (as of 5/31/11)
- Minimum Investment: $2,500
- Fund manager: William H. Gross
- Manager’s Tenure: Since May 1987
