PIMCO launched PIMCO Credit Absolute Return fund this week within an increasingly crowded field of "absolute-return" bond funds. The fund is run by Mark Kiesel, who has skillfully run the $6 billion PIMCO Investment Grade Corporate Bond (PIGIX) since late 2002. With this addition, PIMCO is hoping to build on the success it has already had in this arena. When the firm launched its first "go-anywhere" fund PIMCO Unconstrained Bond (PFIUX) more than three years ago, the number of such bond funds had not yet exploded in popularity. The fund has since attracted nearly $18 billion in assets.
Cast in a similar mold to Unconstrained Bond, the Credit Absolute Return fund isn't beholden to traditional bond benchmarks and seeks to provide positive returns in a variety of market environments. But unlike its more diversified sibling, the new fund will focus on a range of credit sectors, including investment-grade and high-yield corporates, bank loans, convertibles, municipals, and emerging-markets credit. It also doesn't have as much flexibility to adjust its duration (a measure of interest-rate sensitivity), which can go only as low as zero by prospectus. By contrast, Unconstrained Bond has the flexibility to lower its duration as far as negative three years.
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