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Post by Chahta on Sept 19, 2023 23:59:09 GMT
Received a letter from PIMCO thru Schawb. The .1188 distribution was broken down into sources. 1.75% comes from "Paid-in-surplus or Other Capital Sources". Is that code for "ROC"? 98.25% comes from "Net Investment Income".
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Post by keppelbay on Oct 1, 2023 8:10:35 GMT
The monthly 19a forms report any distribution not sourced from net investment income (NII). PIMCO must issue a form if the current months distribution contains capital gains or returns shareholder capital (ROC). These reflect the state of play at the time, but the distributions are subject to recharacterization over the course of the fiscal year, if for example excess income in later months retroactively 'covers' the prior months ROC.
This month I recieved 19a forms for PFN and RCS (both in the low single digits), but not from PDI or PDO, both of which show poor NII coverage ratios in the monthly UNII reports. Even so, the cash they are distributing did not come from paid in shareholder capital. I take this to mean that concerns about imminent distribution cuts in the PIMCO suite may be premature.
(Not all sources of income are characterized as NII, so the UNII reports of NII coverage can be misleading about actual overall cashflow. The retrospective look in the annual report tells whether shareholder capital was returned over the course of the fiscal year).
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Post by Fearchar on Oct 1, 2023 10:44:21 GMT
Chahta, Yes; to me that's essentially what it means. Underlying securities held by PTY carry a lot of risk. Paying a premium for assuming that risk does not seem like a good idea to me. Typical retail investors are unlikely to consistently anticipate a distribution cuts. When they do happen, market makers and robots will beat us up. I will only consider PTY when the monthly distribution rate exceeds 12%.
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Post by keppelbay on Oct 3, 2023 8:11:25 GMT
update:
PDI, PDO, PAXS and others had not issued 19a forms as of Oct 1st (when RCS and PFN did). They have now done so, reporting 34%, 12% and 9% protential ROC in the September distribution.
Whether this portends a distribution cut remains to be seen, but it lowers my confidence that we won't see one. fwiw
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