The PIMCO High Yield Fund – What You Should Know Before InvestingSeptember 13th, 2012 by David Waring
PIMCO High Yield Fund Overview
Summary: The PIMCO High Yield Bond Fund (PHYDX) has provided middle of the road risk (for a high yield bond fund), and middle of the road returns.
Commentary: With over $19 Billion under management, the PIMCO High Yield Fund is the largest high yield bond fund in the world. Its size is likely a major contributor to its middle of the road performance. The high yield bond market is not as liquid as the investment grade market, making outperformance with a large fund difficult. Generally you do not want to be in a large high yield fund because:
- There is a high turnover cost to trading, making repositioning the portfolio difficult
- When you need to place a 50 million dollar trade or above, there aren’t too many choices.
Vanguard, which also has one of the largest high yield bond funds, just closed its fund to new investors.
On the positive side, as far as high yield funds go, this is one of the more conservative. So, while you are unlikely to see a much larger than category gain in this fund, you are also unlikely to see a much larger than category loss.
PIMCO High Yield Fund Rating Criteria
Short-Term Performance: OK The PIMCO High Yield Fund has slightly underperformed its category (by -0.34%) over the last 12 months and slightly outperformed its category by 0.23% per year over the last 3 years.
Long-Term Performance: Good The fund has outperformed its category over the last 5 years by .80% per year and and by .33% per year over the last 10 years.
Returns Relative to Risk: Good With any high yield fund comes additional risk, but the PIMCO High Yield Fund is one of the lower risk high yield funds. In fact, currently the fund’s top position (16% of portfolio) is in the PIMCO short term fund, which is basically a place to park cash.
Fees: OK If you decide to invest in the fund, make sure you get the D shares (Ticker PHYDX) which have no load and a .90% expense ratio. If you can get access to the P shares (Ticker PHYDX) then you can get into the fund with no load and a .65% expense ratio. The minimum investment size for the P shares is $1 Million. However sometimes the P shares are available for a couple of thousand minimum through retirement plans. You can learn more about mutual fund fees here.
Manager Tenure: OK Andrew Jessup joined the firm as lead manager of the fund in January of 2010.