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Fund Spy: Morningstar Medalist Edition

Storms Be Damned: PIMCO Short-Term Paddles Smoothly Under the Surface

PIMCO's big 2014 departures have had no noticeable effect on this fund, a cornerstone contributor to many in its family.

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Pundits have been predicting for years that rising bond-market yields were just around the next corner, arguing it inevitable thanks to the Fed's unprecedented stretch of loose monetary policy. That perspective became more mainstream over the past 18 months thanks in part to healthier data on the U.S. economy.

Just as conventional wisdom became all but certain that the Fed would act in late 2015, weak economic data from China, combined with rising U.S. bond yields in anticipation of that near-term Fed hike, changed the landscape. As of mid-October, the pricing of futures contracts signaled that the market didn’t put more than a 50% probability of a hike until at least March 2016.

Eric Jacobson has a position in the following securities mentioned above: PTTRX. Find out about Morningstar’s editorial policies.