Is PIMIX worth looking at now?

[steadyeddy]

Do you think it can navigate higher interest rates better than bond indexes?

Thanks

[steadyeddy]

PIMCO has huge Russia exposure says this article. I guess I answered my own question

Could this explain the struggles with PDI and other CEFs from PIMCO?

[Chahta]

I will never again own a PIMCO anything. There are too many other good choices. It is obvious they will go to any lengths to TRY to be the most impressive. Argentina now this. I cannot believe they would jeopardize their investors this way. But I am sure the press will bow down to Ivascyn every time.


steadyeddy, I don't follow CEFs but I am not sure they all are not doing well now. The article tagged the problem to 4 OEFs, one of which was PIMIX.

[oldskeet]

For the professional money manager Russian bonds most likely will provide opportunity over the nest couple of years. With this, I am keeping my shares of Pimco Income (PONAX) and a few other funds that contained Russian exposure both fixed and equity. It's a contrarian play for me.  Out of favor now ... but, wait and hold what you've got ... and, see what happens over a couple years.  I have already been dinged so for me it is worth the wait.

[Chahta]

oldskeet, did you read the article? If Russia defaults, your fund will pay out on swaps sold to private investors. Sounds like PIMCO bet against it's share holders. Could get uglier.

[oldskeet]

Hi Chahta,

I'm thinking these anticipated losses are already baked into the fund nav's. And, how about the possibility the losses being insured? Again, I am leaving playing Russia up to the professional money manager. Not buying more exposure nor selling what I have. Old_Skeet

[uncleharley]

Don't you buy no falling knives!!!

[Fearchar]

Chahta, steadyeddy,

In general Bond funds do not navigate rising rates very well.

I own a good chunk of PIMIX and have taken a beating on it.
YTD PIMIX is off 5.03%
So, yes in hindsight, it was a mistake.

An alternative I've considered is VCSH which is off 2.91% YTD.
VCSH = Vanguard Short Term Corporate Bond Fund.
I attribute most of the difference to the leveraging that PIMIX uses.
My impression is that the Russian losses are only a small part of the YTD losses for PIMIX.
To me, the Russian War is a one of type of event.
Makes for a nice headline with the War going on, but really only illustrates the reason for diversification.


Lesson Learned: Owning a leveraged bond fund when rates are expected to rise is a mistake.


More on VCSH; its SEC yield is currently 2.23%.
With inflation running so much higher, it's doubtful that VCSH will outperform PIMIX over longer periods of time.

PIMIX is primarily Residential Mortgage Backed Securities (RMBS).
30 year mortgages have risen for 3.33% at year end to 4.15%.

Could they go higher?
Yes; but consider some history.

Over the last 10 years, the highest 30 year mortgages rate was 2/17/2011: 5.04%
It very briefly hit 4.94% in Nov 15, 2018.
Looking over the 10 graph, there appears to be soft upper limit of 4.5%

FRED 30 Year Mortgage Chart

So, while there is still some room for rates to rise, another Lesson for Investors is Market Timing.
That is, would it clearly be wiser to dump PIMIX with RMBS at 4.15% in the hope that significantly higher rates will be realized in the near term?
That is would it be worthwhile to be in Cash between now and higher rates?

I actually have a much larger cash position than what I have in PIMIX.
But, my strategy is to hold on to that until ICE BofAML HY index hits 7%.
It's possible that 30 year mortgages will hit 5% about the same time ICE BofAML hits 7%; I don't know.
I'm not full in this market at this point in time.

Looking forward, it's still the future that matters: Risks and Returns.
You stated there are several other good alternatives.
I am open to something better than PIMIX.
Can you share what those are?


Thanks!

[Chahta]

I want to own another MS fund but it will not be PIMIX. At some point TSIIX will look good, once rates gave steadied. Hopefully when the Fed starts raising it will steady the longer term rates and bond funds should do better. There is a good Seeking Alpha article that explained that theory. It was posted by FD1000.

[steadyeddy]

I do not own PIMIX, but I do own PDI, PTY and PDO in small quantities.

[steadyeddy]

Mar 10, 2022 16:51:06 GMT Fearchar said:

Chahta , steadyeddy ,

In general Bond funds do not navigate rising rates very well.

I own a good chunk of PIMIX and have taken a beating on it.
YTD PIMIX is off 5.03%
So, yes in hindsight, it was a mistake.

An alternative I've considered is VCSH which is off 2.91% YTD.
VCSH = Vanguard Short Term Corporate Bond Fund.
I attribute most of the difference to the leveraging that PIMIX uses.
My impression is that the Russian losses are only a small part of the YTD losses for PIMIX.
To me, the Russian War is a one of type of event.
Makes for a nice headline with the War going on, but really only illustrates the reason for diversification.


Lesson Learned: Owning a leveraged bond fund when rates are expected to rise is a mistake.


More on VCSH; its SEC yield is currently 2.23%.
With inflation running so much higher, it's doubtful that VCSH will outperform PIMIX over longer periods of time.

PIMIX is primarily Residential Mortgage Backed Securities (RMBS).
30 year mortgages have risen for 3.33% at year end to 4.15%.

Could they go higher?
Yes; but consider some history.

Over the last 10 years, the highest 30 year mortgages rate was 2/17/2011: 5.04%
It very briefly hit 4.94% in Nov 15, 2018.
Looking over the 10 graph, there appears to be soft upper limit of 4.5%

FRED 30 Year Mortgage Chart

So, while there is still some room for rates to rise, another Lesson for Investors is Market Timing.
That is, would it clearly be wiser to dump PIMIX with RMBS at 4.15% in the hope that significantly higher rates will be realized in the near term?
That is would it be worthwhile to be in Cash between now and higher rates?

I actually have a much larger cash position than what I have in PIMIX.
But, my strategy is to hold on to that until ICE BofAML HY index hits 7%.
It's possible that 30 year mortgages will hit 5% about the same time ICE BofAML hits 7%; I don't know.
I'm not full in this market at this point in time.

Looking forward, it's still the future that matters: Risks and Returns.
You stated there are several other good alternatives.
I am open to something better than PIMIX.
Can you share what those are?


Thanks!

Fearchar, don't beat yourself up. PIMIX year-to-date lost about 5% while BND lost 4% give or take a fraction. In aggregate I do expect PIMIX to be competitive. No need to run for the exits in my opinion. PIMCO is the best bond manager out there (until proven otherwise).

[steadyeddy]

Mar 10, 2022 15:52:45 GMT uncleharley said:

Don't you buy no falling knives!!!

uncleharley, what do you do when everything is falling? 

[FD1000]

Mar 10, 2022 16:51:06 GMT Fearchar said:

Chahta , steadyeddy ,

In general Bond funds do not navigate rising rates very well.

I own a good chunk of PIMIX and have taken a beating on it.
YTD PIMIX is off 5.03%
So, yes in hindsight, it was a mistake.

An alternative I've considered is VCSH which is off 2.91% YTD.
VCSH = Vanguard Short Term Corporate Bond Fund.
I attribute most of the difference to the leveraging that PIMIX uses.
My impression is that the Russian losses are only a small part of the YTD losses for PIMIX.
To me, the Russian War is a one of type of event.
Makes for a nice headline with the War going on, but really only illustrates the reason for diversification.


Lesson Learned: Owning a leveraged bond fund when rates are expected to rise is a mistake.


More on VCSH; its SEC yield is currently 2.23%.
With inflation running so much higher, it's doubtful that VCSH will outperform PIMIX over longer periods of time.

PIMIX is primarily Residential Mortgage Backed Securities (RMBS).
30 year mortgages have risen for 3.33% at year end to 4.15%.

Could they go higher?
Yes; but consider some history.

Over the last 10 years, the highest 30 year mortgages rate was 2/17/2011: 5.04%
It very briefly hit 4.94% in Nov 15, 2018.
Looking over the 10 graph, there appears to be soft upper limit of 4.5%

FRED 30 Year Mortgage Chart

So, while there is still some room for rates to rise, another Lesson for Investors is Market Timing.
That is, would it clearly be wiser to dump PIMIX with RMBS at 4.15% in the hope that significantly higher rates will be realized in the near term?
That is would it be worthwhile to be in Cash between now and higher rates?

I actually have a much larger cash position than what I have in PIMIX.
But, my strategy is to hold on to that until ICE BofAML HY index hits 7%.
It's possible that 30 year mortgages will hit 5% about the same time ICE BofAML hits 7%; I don't know.
I'm not full in this market at this point in time.

Looking forward, it's still the future that matters: Risks and Returns.
You stated there are several other good alternatives.
I am open to something better than PIMIX.
Can you share what those are?


Thanks!

Several comments.  You can do what you want.

Selll PIMIX? only problem now, it's too late, I don't post what I do anymore but sometimes as a gesture I post the obvious, and why I made the warning about PIMIX already in 1/14/2022(link).
You are falling to the same trap as others, just because a fund pays higher income, it doesn't mean it's a better deal.  Only risk+performance matter.

ICE BofAML HY isn't a good indicator for trading, it doesn't tell you the best time to buy and sell. If you have the trading rules, please post them.

VCSH,BND and most other bond funds are not a replacement + stocks + CEFs are not good either when markets are at high risk. Only cash is king for weeks, unless you want to own commodities (and they can lose a lot suddenly too).

Most posters don't listen to what I post. I'm OK with that. 

[Fearchar]

Mar 10, 2022 16:58:05 GMT Chahta said:

I want to own another MS fund but it will not be PIMIX. At some point TSIIX will look good, once rates gave steadied. Hopefully when the Fed starts raising it will steady the longer term rates and bond funds should do better. There is a good Seeking Alpha article that explained that theory. It was posted by FD1000 .

Thanks Chahta, 

Now I understand.

[joepat12]

sold out all of my pimco funds expect pdi and plan to sell when time is right.
pimco funds has been a loser for me.   jljl