Pimco RealPath Blend Series
This target-date series offers the best of both worlds.
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The Pimco RealPath Blend target-date series benefits from a sharp lead manager who leverages the firm's abundant resources on this well-crafted retirement option. This series continues to earn top marks, with its cheapest share class receiving a Morningstar Analyst Rating of Gold, while the more expensive share classes earn Silver or Bronze ratings.
Skilled manager Erin Browne has an extensive background in asset allocation, bringing 20 years of investment experience to this strategy. This experience is a plus, but she is also able to leverage the resources of Pimco's robust investment committee, which contains leading investment professionals from across the firm. The depth of her knowledge paired with the thought leaders on the committee make for a potent combination, and together they set the series' asset allocation and come to a group view on macro factors like duration, currencies, and credit sector weights.
The team has constructed a set of complementary portfolios. It allocates the equity portion of the glide path to low-cost broad market Vanguard index funds and uses its stellar in-house active bond funds for fixed-income exposure. The topnotch quality of the underlying funds gives this series an edge. Roughly 92% of the series' assets reside in Morningstar Medalist funds, most of which are rated Gold, indicating our high conviction.
The fixed-income portfolio, which comprises the firm's flagship bond funds, courts more credit risk than peers that own broad bond market index funds as their core fixed-income holdings. Yet, the underlying active managers' ability to constructively pair big-picture research and bottom-up analysis gives us confidence in the approach. The allocation team also effectively damps that potential risk near retirement by purchasing put options against the S&P 500 in the two vintages closest to retirement (currently the 2025 and 2030 funds) and in its retirement income fund. Although this has been a drag on performance in 2021, it served investors well during the coronavirus market panic in 2020 (Feb. 20 to March 23). During that period, the puts contributed 185 basis points to the 2025 fund and helped preserve nest eggs near retirement, when they are likely to be at their peak.