Bond giant PIMCO launches income fund

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Bond fund powerhouse PIMCO has launched a Ucits-compliant version of its existing global multi-sector fixed income fund in order to meet offshore demand for the strategy.

The PIMCO GIS Income Fund was added to the California-based fixed income specialist’s Dublin-domiciled SICAV range on Wednesday.

The fund – which was launched for US investors in 2007 – operates an unconstrained approach to fixed income and is able to invest in a host of asset types including sovereign bonds, emerging market debt and bank loans.

Speaking to Citywire Global, Dan Ivascyn, head of the mortgage credit portfolio and lead manager on the PIMCO GIS Income fund, said the new strategy is designed to offer a defensive, sustainable return to investors.

‘The fund is a bit unique in that the generation of a consistent dividend stream is the primary objective and the creation of total returns, while important, is a secondary consideration in this approach,’ he said. ‘Clients around the globe are looking for a predictable income stream.’

Ivascyn, who will be supported on the fund by Alfred Murata, said it will operate a broadly similar allocation to the existing US version of the fund. One feature of this fund is to focus holdings on the most secure debt available.

‘We will, for example, focus on the senior most bond in a capital structure. We will look to buy the senior bank loan, so we will avoid the unsecured senior debt in favour of the senior bank obligation where we can,’ he said.

Positioning

In the US version of the fund at present the largest US sector allocations are to non-agency mortgage-backed securities making up nearly 25% of the fund, followed by emerging market debt (16%) and agency-backed mortgages (15%).

Ivascyn said, on a geographic basis, the fund will invest largely in nations which are relatively strong in regards to interest rate management and efforts to counter inflation.

‘The fund will look for markets where there is strong fundamental growth potential. So this is where the government has been able to keep their debt in line with GDP,’ said Ivascyn, who named Australia as an example of such a country.

The PIMCO GIS Income Fund will be available to investors in institutional and retail share classes in various currency-hedged versions.