As part of my investment analysis process, Sue Senio, Trent Nicolay, and I travelled to Calgary this week to see Alfred Murata - the managing director and portfolio manager of PIMCO Monthly Income. Alfred made his way up to Canada, from California, to meet with a number of advisors, and we took full advantage of the opportunity to chat with him and ask a number of questions.
PIMCO Monthly Income (Canada) consists of a portfolio of fixed income investments, meaning it does not have exposure to stocks or the stock market. Over the first 9 months of 2019, PIMCO Monthly Income (Canada) Series A earned a 4.67% return. However, it did show us that it is not entirely insulated from downward volatility in August 2019. PIMCO Monthly Income pulled back slightly in August, due to a variety of global factors including an election upset in Argentina. We took the opportunity to discuss the pullback with Alfred directly while he was in Calgary. There were great discussions on PIMCO’s recent performance, in addition to their strong long-term track record during our meeting. As soon as their Monthly Income investment dipped, PIMCO's team immediately reached out to me to explain the cause of the pullback. It was also a welcome surprise when they later called to let me know that Alfred would be in Calgary, offering an opportunity for us to get together with him. In Calgary, Alfred went into more performance related detail for us and then he took time to review their forecasts for the next couple of years in the world of fixed income investing. To me, this demonstrates their commitment to staying proactive in the world of fixed income. PIMCO manages over $1.7 trillion US of fixed income for investors, but their size certainly does not slow them down when it comes to their investment strategy.
Solid fixed income investments are important for diversifying your portfolio and reducing volatility. However, with interest rates near all-time lows, finding high quality fixed income investments that fit this role continues to be a challenge. Presently, GICs are paying in the low 2% range per year - barely enough to keep up with roughly 2% annual inflation in Canada! However, for investors who are looking to reduce volatility in their portfolio even further, GICs may be a good fit.
As you can see in the chart below, PIMCO's Monthly Income investment has averaged 6.41% per year in growth, since January 2013.
PIMCO provides a great foundation within many of the portfolios that we manage and continues to be a high quality fixed income investment with great potential for future income.
If you would like to read more about PIMCO’s strategic process, I have included a quick article discussing PIMCO's thoughts on why they do not project a U.S. recession in the short-term and why they have decided to hold a higher portion of their monthly income strategy in shorter-term investments. To read PIMCO’s article, please click here.
The bottom line is that my team, and I, are confident in PIMCO's ability to continue to be a strong fixed income investment to hold long-term. If you would like to discuss PIMCO's role in a comprehensive wealth management strategy, please click here to reach out to me.