Kenneth Oshodi: A robust and experienced team, straightforward process, impressive returns, and attractive fees distinguish PIMCO High Yield Spectrum from its competitors.
Andrew Jessop has led this fund since its September 2010 inception and his comanager, Hozef Arif, joined him in July 2016. They are supported by an expansive team of 10 high-yield bond portfolio managers, 60 global credit research analysts, plus another 10 distressed debt specialists.
As its name indicates, the fund primarily holds a broad swath of the high-yield universe, and its exposure to regions outside of North America regularly tops its typical, U.S.-focused peer's allocation. Currently, exposure to bonds rated CCC and below is also on the heftier side of category entrants, but Jessop is mindful of overall portfolio risk and holds a sizable cash stake.
Most recently, the fund's formidable returns are due to its team's ability to avoid large credit market losses and take advantage of strong subsequent rallies. For example, the team raised concerns about the energy sector early and avoided troubled issuers that tumbled in 2014 and 2015. Afterward, a healthy allocation to lower-quality debt rated CCC and below helped it to outperform most peers as credit markets rallied. In all, the fund's 7.1% annualized return since inception is best-decile among peers.
This fund's deep, veteran team, effective process, notable returns, and inexpensive fees support its Morningstar Analyst Rating of Silver.