Mutual Funds

5 Compelling Pimco Picks

By Elizabeth Ody, Associate Editor

From Kiplinger's Personal Finance magazine, September 2009

Total Return. Bill Gross mostly buys investment-grade, intermediate-term U.S. bonds for Pimco's flagship fund. Skip the sales fee with near-clone Harbor Bond (symbol HABDX), which charges 0.55% and yields 4.5%. Harbor, a member of the Kiplinger 25, gained 8.4% over the past year through June 30 and 6.1% annualized over the past five years.

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CommodityRealReturn Strategy. Manager Mihir Worah buys derivatives to tap a broad basket of commodities. But the derivatives tie up only a small part of the fund's assets, and he stashes the bulk in Treasury inflation-protected securities. Because of the crash in commodity prices, the fund, also a member of the Kiplinger 25, plunged 50.6% over the past year and lost 0.3% annualized over the past five. The fund's Class D shares (PCRDX) are available without sales charges through many discount brokers and charge 1.24% annually.

Investment Grade Corporate. This fund isn't pure vanilla; manager Mark Kiesel can dabble in other sectors. The D shares (PBDDX) recently yielded 5.2% and charge 0.90% in annual expenses. Those shares have gained 6.7% annualized over the past three years, and 7.7% over the past year.

Emerging Local Bond. Manager Michael Gomez buys emerging-markets debt denominated in local currencies. The young fund lost 1.1% over the past year but gained 12.5% in the first half of this year. The D shares (PLBDX) charge 1.35% and recently yielded 6.4%.

Global Multi-Asset. This barely tested hedge fund-like mutual fund is co-manager Mohamed El-Erian's opportunity to put his worldview to work. The Class D shares (PGMDX) charge 1.55% and gained 4.5% in the first half of the year.

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