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PIMCO Total Return Fund performance after fees (Institutional)

The PIMCO Total Return Fund returned 1.50% after fees in Q3 2017, outperforming the Bloomberg Barclays U.S. Aggregate Index by 0.65%. Year-to-date the Fund has returned 5.01% after fees, outperforming the benchmark by 1.87%.

Geopolitical uncertainties, including escalating tensions between the U.S. and North Korea and political turmoil within the Trump administration, weighed on yields early in the quarter, though risk assets were generally resilient. Meanwhile, DM central banks shifted towards a reduction in accommodation that pushed DM yields higher toward the end of the quarter: The Fed detailed plans to unwind its balance sheet, the BOE and ECB suggested less stimulus on the horizon, and the BoC raised rates twice after a 7 year gap. Still, the fundamental backdrop remained largely intact and the broader risk rally continued as equities marched higher, credit spreads tightened, and EM assets strengthened.

As of 30 September 2017. Source: PIMCO, Bloomberg. Total Expense Ratio: 0.51%
  • Average Annual Returns
  • Cumulative Returns

All data as of

  • Daily
  • Month End
  • Quarter End

All data as of

  • Daily
  • Month End
  • Quarter End

Performance quoted represents past performance. Past performance is not a guarantee or a reliable indicator of future results. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed. Current performance may be lower or higher than performance shown. For performance current to the most recent month-end, visit or call (888) 87-PIMCO.

Current portfolio positioning and strategy

PIMCO expects world GDP growth in 2018 to remain steady at 2.75%–3.25%, unchanged from 2017. Overall, we see a low near-term risk of recession, a moderate pickup in underlying inflation in the advanced economies, mildly supportive fiscal policies and only a gradual removal of accommodative central bank policy. However, we do see risks that could upset the calm: the aging U.S. expansion, the coming end of central bank balance sheet expansion, and China’s course following its 19th National Communist Party Congress in October.

U.S. interest rate strategies

The intermediate portion of the curve continues to offer attractive characteristics while longer-term rates may rise as the Fed continues to reduce accommodation and term premiums return.

Credit selection

We find attractive opportunities in specific credits that benefit from U.S. growth and a resurgent housing sector. We see value in banks and select financial companies as well as housing-related credits.

Tactical currency positioning

The currencies of China’s largest regional trading partners are likely to be pressured lower as the Chinese yuan continues to depreciate, particularly against DM currencies as DM central banks reduce the extent of extraordinary policy support.


We continue to have a favorable view of TIPS but have tactically adjusted sizing near-term to reflect some technical headwinds. They are still attractive and can provide attractively-priced insurance against upside surprises in inflation.

As of 30 September 2017

Allocation Table

Allocation Table
1 Emerging Markets: Short duration emerging markets instruments includes an emerging market security or other instrument economically tied to an emerging market country by country of risk with an effective duration less than one year and rated investment grade or higher or if unrated, determined to be similar quality by PIMCO. Emerging Markets includes the value of short duration emerging markets instruments previously reported in another category.

2 Municipal/Other: May include municipals, convertibles, preferreds, and yankee bonds.

3 Net Other Short Duration Instruments: Net Other Short Duration Instruments includes securities and other instruments (except instruments tied to emerging markets by country of risk) with an effective duration less than one year and rated investment grade or higher or, if unrated, determined by PIMCO to be of comparable quality, commingled liquidity funds, uninvested cash, interest receivables, net unsettled trades, broker money, short duration derivatives (for example Eurodollar futures) and derivatives offsets. With respect to certain categories of short duration securities, the Adviser reserves the discretion to require a minimum credit rating higher than investment grade for inclusion in this category. Derivatives Offsets includes offsets associated with investments in futures, swaps and other derivatives. Such offsets may be taken at the notional value of the derivative position which in certain instances may exceed the actual amount owed on such positions.

Portfolio information in the charts is based on the fund's net assets. These percentages may differ from those used for the fund's compliance calculations, including the fund's prospectus, regulatory, and other investment limitations and policies, which may be based on total assets of the fund or other measurements, may include or exclude various categories of investments from those covered in the portfolio allocation categories shown in this report, and may be based on different classifications and measurements of the fund’s investments and other criteria.

All holdings are subject to change daily. All share classes have the same portfolio but different expenses. Duration is a measure of a portfolio’s price sensitivity expressed in years. Effective duration is the duration for a bond with an embedded option when the value is calculated to include the expected change in cash flow caused by the option as interest rates change.

Guarding and Growing Capital Over 30 Years

Since its inception, PIMCO Total Return Fund has tapped a global team of seasoned investment professionals to actively search for diverse sources of returns from higher-quality, intermediate term bonds across the world, in its focus on providing stable, steady growth across market environments. The fund has performed well during periods of market volatility, providing critical diversification with respect to equities and more credit oriented investments.

Resiliency Across Market Environments

PIMCO Total Return has served as a cushion for investors’ portfolios during equity market selloffs. As seen in the chart below, in months where equities sold off or high yield spreads widened the most the fund’s return profile has been far more resilient than those of its Morningstar peer group. These adverse market environments are precisely when a true core bond offering should provide diversification benefits, something PIMCO Total Return has delivered over the past three decades.

Performance quoted represents past performance. Past performance is not a guarantee or a reliable indicator of future results. Investment return and the principal value of an investment will fluctuate. Shares may be worth more or less than original cost when redeemed. Current performance may be lower or higher than performance shown. For performance current to the most recent month-end, visit or call (888) 87-PIMCO.

As of 30 September 2017. SOURCE: Morningstar, Bloomberg, PIMCO. Performance shown is for the institutional share class after-fees.
Equities are represented by the S&P 500 Total Return Index. High Yield is represented by the Barclays U.S. Corporate High Yield Index. Peer group based on all share classes of funds in Morningstar’s OE Intermediate-Term Bond Category. PIMCO Total Return (TR) performance reflects the institutional share class (PTTRX). The current top quartile reflects those share classes currently in the top quartile based on three-year returns. Monthly returns are calculated from January 1994, the earliest available date for the HY index
Fund Morningstar rankings: 1 Yr. 84 (985 investments ranked); 3 Yrs. 118 (852 investments ranked) 5 Yrs. 254 (773 investments ranked); 10 Yrs. 22 (546 investments ranked).
*The worst equity returns are identified as the worst 25% of months with negative S&P 500 returns
**The most HY spread-widening months are identified as the widest 25% of months with spread widening
‘All Peers’ and ‘Current Top Quartile’ performance reflects performance excluding the PIMCO Total Return Fund

We will continue to examine the many benefits of PIMCO Total Return Fund in the coming quarters.

Monthly Commentary

Download the Monthy Commentary for more information about recent Total Return Fund performance.

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Cyclical outlook

As Good as It Gets

We see three risks to the outlook for steady economic growth. Yet we also see opportunities for investors to target above-benchmark returns while emphasizing defense at a time of low volatility and full valuations.


Investors should consider the investment objectives, risks, charges and expenses of the funds carefully before investing. This and other information are contained in the fund’s prospectus and summary prospectus, if available, which may be obtained by contacting your investment professional or PIMCO representative or by visiting Please read them carefully before you invest or send money.

Past performance is not a guarantee or a reliable indicator of future results. The performance figures presented reflect the total return performance and reflect changes in share price and reinvestment of dividend and capital gain distributions. All periods longer than one year are annualized. The minimum initial investment for Institutional class shares is $1 million; however, it may be modified for certain financial intermediaries who submit trades on behalf of eligible investors.

Investments made by a Fund and the results achieved by a Fund are not expected to be the same as those made by any other PIMCO-advised Fund, including those with a similar name, investment objective or policies.  A new or smaller Fund’s performance may not represent how the Fund is expected to or may perform in the long-term.  New Funds have limited operating histories for investors to evaluate and new and smaller Funds may not attract sufficient assets to achieve investment and trading efficiencies.  A Fund may be forced to sell a comparatively large portion of its portfolio to meet significant shareholder redemptions for cash, or hold a comparatively large portion of its portfolio in cash due to significant share purchases for cash, in each case when the Fund otherwise would not seek to do so, which may adversely affect performance.

Differences in the Fund’s performance versus the index and related attribution information with respect to particular categories of securities or individual positions may be attributable, in part, to differences in the pricing methodologies used by the Fund and the index.

There is no assurance that any fund, including any fund that has experienced high or unusual performance for one or more periods, will experience similar levels of performance in the future. High performance is defined as a significant increase in either 1) a fund’s total return in excess of that of the fund’s benchmark between reporting periods or 2) a fund’s total return in excess of the fund’s historical returns between reporting periods. Unusual performance is defined as a significant change in a fund’s performance as compared to one or more previous reporting periods.

A Word About Risk: Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign-denominated and/or -domiciled securities may involve heightened risk due to currency fluctuations and economic and political risks, which may be enhanced in emerging markets. Mortgage- and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market's perception of issuer creditworthiness; while generally supported by some form of government or private guarantee, there is no assurance that private guarantors will meet their obligations. High yield, lower-rated securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Derivatives may involve certain costs and risks, such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. Diversification does not ensure against loss.

There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision.

Bloomberg Barclays U.S. Aggregate Index represents securities that are SEC-registered, taxable and dollar-denominated. The index covers the U.S. investment grade fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. It is not possible to invest directly in an index.

Morningstar™ Rating as of 31 October 2017 for the institutional class shares; other classes may have different performance characteristics. The PIMCO Total Return Fund was rated against the following numbers of intermediate-term bond funds over the following time periods: Overall 4 Stars (854 funds rated); 3 Yrs. 4 Stars (854 funds rated); 5 Yrs. 3 Stars (772 funds rated); 10 Yrs. 5 stars (548 funds rated). Past performance is no guarantee of future results. The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Morningstar, Inc.® 2017. All rights reserved. The information contained herein: (1) is proprietary to Morningstar (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.

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