Products February 5, 2009

PIMCO Fund Seeks to Benefit from Shifts in Global Economy

PIMCO has launched the PIMCO Global Advantage Strategy Bond Fund, "designed to help fixed-income investors seize opportunities created by dramatic shifts in the global economy."
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According to a press release, the fund may invest in a broad range of fixed-income instruments and includes as one of its benchmarks the recently launched PIMCO Global Advantage Bond Index (GLADI) (see “PIMCO Says Index Positions Investors for Global Economic Shifts’). The fund is co-managed by PIMCO Co-Chief Investment Officer Mohamed El-Erian and Executive Vice President Ramin Toloui.

PIMCO says the Global Advantage Strategy Bond Fund “is motivated by the recognition that a range of evolving dynamics – including those between governments and markets, between developed and developing countries, and between domestic and foreign investors – will critically influence investment outcomes in coming years.” The firm’s global macro and sector positioning are enhanced by bottom-up credit and security analysis undertaken by specialist teams around the globe, the announcement said.

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The ticker symbol for the PIMCO Global Advantage Strategy Bond Fund (Institutional class) is PSAIX.

The Markets February 5, 2009

Q408 Dark Time for Equity Investors

The fourth quarter of 2008 was not a good time for equity investors, according to the latest Mercer 2008 Defined Contribution Universe Summary data.
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Mercer data shows the fourth quarter saw losses in all equity markets during a period when Mercer said the S&P 500 lost 21.9%.

Value funds outperformed growth funds during the quarter, as the median large-cap value fund posted a loss of 21.4% compared with a loss of 23.1% for the median large-cap growth fund. The small-cap segment trended in the same direction as large cap stocks, as the median small-cap value fund outperformed the median small cap growth fund by 190 basis points.

The median large-cap fund underperformed the S&P 500 Index by 10 basis points during the period, according to Mercer’s data. Small-cap funds underperformed their large-cap counterparts for the quarter, as the median small cap fund lost 26.1% versus a loss of 22% for the median large cap fund.

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International Equities

Within the international equity asset class, the median manager underperformed the MSCI EAFE Index by 140 basis points during the quarter, Mercer said. The median emerging markets manager lost 29% for the quarter and underperformed the MSCI Emerging Markets Free Index by 140 basis points.

International equity markets, as measured by the MSCI EAFE Index, lost 20% during the fourth quarter, while the fixed income asset class turned in a positive quarter, with the Barclays Capital Aggregate Bond Index posting a 4.6% gain. Money market instruments rose 0.3%, as measured by the three-month T-bill rate.

The balanced asset class, using a benchmark of 60% S&P 500/40% Barclays Capital Aggregate Bond Indices, posted a loss of 11.9%. The median core fixed income fund underperformed the Barclays Capital Aggregate Bond Index in the fourth quarter by 370 basis points.

According to Mercer, capital market returns turned negative over the long term as significant losses during 2008 affected results. Over a 10-year time frame, the S&P 500 Index lost 1.4%, while the Russell 2000 Index gained 3%. International equity markets produced a gain of only 0.8% over a 10-year time frame, outperforming their U.S. counterparts.

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