# Pimco Monthly Income Fund Canada



## robfordlives (Sep 18, 2014)

Does anyone own this fund? The MER is high but they substantially outperformed other bond funds in CAnada in the prior year with performance exceeding 6%. Looks like they invest all over the world and PIMCO is known for having the best bond team in the business.

Is there a place for this in people's portfolios? Currently not very satisfied in any of the bond ETF's or mutual funds I own.

https://www.pimco.ca/en-ca/investments/mutual-funds/monthly-income-fund-canada/cada-cad-unhedged


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## Jimmy (May 19, 2017)

I was looking at that too. In their prospectus they list the % of assets by credit. They get high yields because about 40% of it is below investment grade ( ie junk) MBS, Senior Loans etc. Not just a bond fund.


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## james4beach (Nov 15, 2012)

My two biggest problems with this are (1) not enough history and no bear market results, and (2) very high complexity and an exotic portfolio.

This fund has only existed since 2011 so it wasn't even around during the financial crisis and that's one concern. They've also had the good fortune of a very strong bull market in exotic forms of credit: ABS, MBS, junk bonds, emerging market debt, and global bonds. This fund is heavy in junky stuff.

According to the prospectus there can be about 10% net foreign currency exposure, so that's a consideration. They do have some currency risk, and for all we know it may have operated in their favour for now, but might not always.

This is a very exotic and complex fund. They have 26% in asset backed securities, which are packaged instruments with poor liquidity and transparency (this was at the core of the last financial crisis as you might recall). They have another 11% in *non-government* mortgage backed securities, another high risk area that basically imploded a few years ago.

40% of their fund is below investment grade. Given the composition of the fund I'm not sure it's as impressive as it looks. Basically it's much riskier than XBB. May be not as risky as a pure junk bond fund, though.

Personally I would never touch anything like this, especially with such high exposures to ABS, MBS, high derivative content, and basically all the alphabet soups that nearly destroyed the financial world in 2007-2009. You just don't know what you're getting.

There's no problem with taking risk, but it's probably better to separate your risk into the stock bucket (stock indexes) and leave your bonds simple and high quality, like XBB and VAB.


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