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 has a skillful manager at the helm who works jointly with Pimco’s well-regarded investment committee. They bring together exceptional funds across asset classes while effectively balancing passive equity and active bond exposures, meriting an inaugural Morningstar Analyst Rating of Gold for the series’ cheapest share class. Its more-expensive share classes earn Silver or Bronze ratings.
Lead portfolio manager and head of asset allocation Erin Browne works with Pimco’s robust investment committee to set the series’ strategic asset allocation based on its top-down asset allocation views. The committee is chaired by CIO Dan Ivascyn, and its views on macroeconomic considerations like duration, currencies, and credit sectors also help guide the underlying bond funds.
This series tactfully 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. About 95% of the series’ assets reside in Morningstar Medalists, most of which are rated Gold, indicating our high conviction in the underlying funds. The index funds have an enduring edge versus most actively managed equity funds thanks to their low fees and broad market-cap-weighted exposure that has proved difficult to beat consistently over the long term. And the bond funds include firm stalwarts Pimco Total Return and Pimco Income, both rated Gold, as well as a mix of more niche holdings like Pimco Real Return and Pimco High Yield.
The bond portfolio generally has more credit risk than peers that own broad bond market index funds as their core fixed-income holdings. Management dampens 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. In the coronavirus-driven market panic (Feb. 20-March 23, 2020) 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.
The series’ Institutional share class comes at an attractive price tag ranging from 0.17% to 0.36%, which should serve investors well.