Pimco RealPath Blend Target-Date Series

The Pimco RealPath Blend target-date series draws on an experienced lead manager and a supporting team of world-class practitioners to construct a sensible glide path that uses strong underlying funds. The series also comes at a competitive price tag, supporting a Morningstar Analyst Rating of Gold for its cheapest share class. The more expensive share classes earn Silver or Bronze ratings.

In 2019, Pimco named Erin Browne lead manager here. Despite a short track record at the helm, she brings an extensive background in asset allocation, having 20 years of investment experience. Her background paired with the resources of Pimco’s robust investment committee, which contains leading investment professionals from across the firm, give this series an edge. The potent combination instills confidence as they set the series’ asset allocation and come to a group view on macro factors like duration, currencies, and credit sector weights.

The team struck the right balance when constructing these well-diversified 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 distinguishes this series. 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 is composed of 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 portfolios closer to retirement also have a longer duration profile relative to their respective peers. This strategic move can serve as a headwind when interest rates rise, like in 2022.

The allocation team attempts to mitigate downside 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 delivered mixed results in 2022, it served investors well during the coronavirus market panic in 2020 (Feb. 20 to March 23).

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