Real Return Asset Fund

PRAIX

Updated Jul 31, 2015

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  • DAILY NAV
    $8.20
  • DAILY YTD RETURN
    -1.30%
  • CLASS
    Fixed Income
  • FUND INCEPTION DATE
    11/12/2001
  • TOTAL NET ASSETS
    $3,072 MM
    (as of 06/30/2015)
  • TOTAL NET ASSETS
    $3,072 MM
    (as of 06/30/2015)
  • TICKER
    PRAIX
  • CLASS
    Fixed Income

Objective

Seeks maximum real return, consistent with prudent investment management

Primary Portfolio

Inflation-indexed bonds

Overview

Fund Overview

Help protect long-term purchasing power

Inflation often appears quickly and unexpectedly, making it important for long-term investors to be prepared in all market environments. The fund aims to help investors protect their purchasing power against the effects of inflation by seeking real (inflation-adjusted) returns primarily from Treasury Inflation-Protected Securities (TIPS).

Why Invest In This Fund

A high-quality inflation hedge

Active management has helped the fund deliver short- and long-term returns solidly ahead of inflation, while the portfolio’s investment-grade orientation has provided a smoother ride than other real return assets such as commodities and real estate.

Potential diversification benefits

While traditional asset classes such as stocks and bonds usually move inversely to inflation, TIPS tend to move in the same direction as inflation. Investing in assets with low correlations to one another, i.e., assets influenced by different factors, can enhance a portfolio’s diversification, potentially lowering overall volatility. Like bond investments in general, TIPS can decline in value if interest rates rise, and may be particularly sensitive if real interest rates rise rapidly.

PIMCO’s expertise

By drawing on the expertise of our global real return team, the fund is able to take advantage of our macro inflation outlook and bottom-up research capabilities.

Our Expertise

The strategy is managed by veteran investors Mihir Worah, CIO Real Return and Asset Allocation and head of the real return and multi-asset portfolio management teams, and Jeremie Banet, executive vice president. PIMCO, one of the largest U.S. investors in TIPS and other inflation-linked assets, launched the country’s first TIPS-focused mutual fund, the same day as the first TIPS auction.

PRIMARY BENCHMARK

Barclays U.S. Treasury Inflation Notes: 10+ Year Index

PRIMARY BENCHMARK DESCRIPTION

Barclays U.S. Treasury Inflation Notes: 10+ Year Index is an unmanaged market index comprised of U.S. Treasury Inflation Protected securities with maturities of over 10 years. It is not possible to invest directly in an unmanaged index.

DIVIDEND FREQUENCY

Monthly with Daily Accrual

SHARE CLASS INCEPTION

11/12/2001

CUSIP

72200Q505

Managers

Mihir P. Worah

CIO Asset Allocation and Real Return

View Profile

Jeremie Banet

Portfolio Manager, Real Return

View Profile

Yields & Distributions

Historical Prices & Distributions

Distribution Yield (At NAV)1 as of 6/30/2015 3.85%
30 - Day SEC Yield2 as of 6/30/2015 2.88%
30 - Day SEC Yield2 as of 7/31/2015 -
Latest Dividend Distribution ($ Share)3 as of 7/31/2015 $0.021994850
Dividend Distribution (YTD)4 as of 7/31/2015 $0.061357330
Yields & Distributions Footnotes & Disclosures

disclosures

The SEC yield is an annualized yield based on the most recent 30 day period. The fund’s yield quotation includes an adjustment to the principal value of the TIPS securities to reflect changes in the government’s official inflation rate, if any; changes in the government’s official inflation rate can cause the fund’s yield to vary substantially from one month to the next. At times, including during periods of deflation, the SEC yield calculation may result in a negative number. If the current 30-day SEC yield is denoted with a “‡,” we believe it is attributable to a rise in the inflation rate, and might not be repeated. Due to the consolidation of operations and permanence of the fund’s fee waivers, such waivers do not materially affect the fund’s SEC yield.

Fees & Expenses

Total Annual Operating Expenses 0.58%
Net Operating Expenses Ex-interest5 0.55%
Fees & Expenses Footnotes & Disclosures

disclosures

5Ex-interest expenses reflect the accounting treatment of certain investments (e.g., reverse repurchase agreements) but do not reflect actual expenses paid to PIMCO.

Prices & Performance

Daily Statistics

All data as of 7/31/2015

NAV $8.20 One Day Return 0.51%
Daily Change $0.04 Daily YTD Return -1.30%
Click here to view Historical Prices
  • 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 and 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 average annual returns shown. Performance quoted does not reflect any sales charges, if applicable, and performance would be lower if it did.

Calendar Year Returns %

All data as of

Growth of $10,000 (hypothetical)

Since inception 11/12/2001 to 6/30/2015 = $26,769

Morningstar and Lipper

  • Morningstar Ratings
  • Lipper Rankings
Prices & Performance Footnotes & Disclosures

disclosures

Performance figures presented reflect the total return performance after fees and reflect changes in share price and reinvestment of dividend and capital gain distributions on the payable date. All periods longer than one year are annualized.
Total return performance does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. 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.
Daily YTD return is from the most recent calendar year end.
Growth of $10,000 is calculated at NAV and assumes that all dividend and capital gain distributions were reinvested. It does not take into account sales charges or the effect of taxes. Results are not indicative of future performance.
Past performance is not a guarantee or a reliable indicator of future results. For funds with at least a 3-yr history, Morningstar calculates a Morningstar Rating based on a risk-adjusted return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads and redemption fees) with an emphasis on downward variations and consistent performance. The top 10% of funds in each 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 is a weighted average of the performance figures for its 3-, 5- and 10-yr (if applicable) Morningstar Rating metrics. Morningstar, Inc.® 2015. All rights reserved. The information contained herein; (1) is proprietary to Morningstar and/or its affiliates; (2) may not be copied or distributed; (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. Hollow stars represent a class of shares with inception dates that is different than the inception date of the fund. For the period prior to the inception date of these shares, performance information is based on the performance of the fund’s Institutional Class shares, adjusted to reflect the actual distribution and/or service (12b-1) fees and other expenses paid by the newer share class.
The Lipper Category returns and rankings are calculated by Lipper Inc., a Reuters Company, which is a nationally recognized organization that compares the performance of mutual funds with similar investment objectives. The Category returns represent the average performance of included funds, while rankings compare an individual fund's returns to those of the other funds in its category. Both are based on total return performance, with capital gains and dividends reinvested, with annual operating expenses deducted, but without including front- or back-end sales charges. Rankings begin with the actual share class inception. Rankings are relative to a peer group and do not necessarily mean that the fund had high total returns.

Portfolio Composition

All data as of unless otherwise stated

Maturity %

0-1 yrs 2.02
1-3 yrs -21.49
3-5 yrs 9.10
5-10 yrs 20.59
10-20 yrs 55.12
20+ yrs 34.66
Effective Maturity (yrs) 17.97

Risk Characteristics
(Trailing 3 Years)

Standard Deviation 9.84
Sharpe Ratio -0.15
Information Ratio -0.26
Tracking Error6 1.53

Sector Allocation
Duration in Years

Inflation-Linked Bonds
United States 11.52
United Kingdom 0.32
Europe 0.25
Canada 0.00
Other7 0.25
Other Short Duration Instruments -0.01
Non Inflation-Linked Bonds
US Government Related8 -0.95
Mortgage 0.03
Invest. Grade Credit 0.09
High Yield Credit 0.04
Non-U.S. Developed -0.58
Emerging Markets9 0.13
EM Short Duration Instruments 0.00
Municipal 0.00
Other7 0.00
Net Other Short Duration Instruments10 -0.74
Portfolio Composition Footnotes & Disclosures

disclosures

6Tracking error, a measure of risk, is defined as the standard deviation of the portfolio's excess return vs. the benchmark expressed in percent.
7May include municipals, convertibles, preferreds, and yankee bonds.
8May include nominal and inflation-protected Treasuries, Treasury futures and options, agencies, FDIC-guaranteed and government-guaranteed corporate securities, and interest rate swaps.
9Short 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.
10Net 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.
References to specific sectors, securities or issuers are for illustrative purposes only. All holdings are subject to change daily. All share classes have the same portfolio but different expenses.

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Disclosures

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.  Click here for a complete list of the PIMCO Funds prospectuses and summary prospectuses. Please read them carefully before you invest or send money.
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. Inflation-linked bonds (ILBs) issued by a government are fixed-income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value when real interest rates rise. Sovereign securities are generally backed by the issuing government, obligations of U.S. Government agencies and authorities are supported by varying degrees but are generally not backed by the full faith of the U.S. Government; portfolios that invest in such securities are not guaranteed and will fluctuate in value. 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. Commodities contain heightened risk including market, political, regulatory, and natural conditions, and may not be suitable for all investors. 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. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Derivatives and commodity-linked 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. Commodity-linked derivative instruments may involve additional costs and risks such as changes in commodity index volatility or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Investing in derivatives could lose more than the amount invested. Diversification does not ensure against loss.
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. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
PIMCO Investments LLC, distributor, 1633 Broadway, New York, NY 10019, is a company of PIMCO.