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2 Ways to Tap Into Research Affiliates' Real-Return Strategy

Jeff Holt, CFA

Jeff Holt: Gold-rated PIMCO All Asset (PASAX) and Bronze-rated PIMCO All Asset All Authority (PAUAX) are built on the same foundation. Research Affiliates subadvises both of these funds and invests them in a deep lineup of more than 40 PIMCO funds. Both funds have a real-return focus and have a lot of flexibility to shift to asset classes with attractive real yields. Currently, emerging-markets equity, debt, and currency play a prominent role in both funds.

Investors should be aware of a couple key differences between the two, though. PIMCO All Asset All Authority may use leverage to amplify the positions by borrowing up to one third of the portfolio's assets. Also, while the two hold nearly all of the same underlying funds, All Authority also holds a fund that shorts U.S. stocks.

As a result of these differences, All Authority comes with a higher price tag, but it hasn't resulted in higher returns or less volatility than PIMCO All Asset over their common history going back to 2003. Investors looking to fully capture Research Affiliates' moves should look to PIMCO All Asset All Authority, but those looking for a toned-down version of the strategy may find what they are looking for in PIMCO All Asset.