PIMCO Global Bond (USD-Hedged) APAIIX

Morningstar Rating

Fund Research and Analysis

by Arijit Dutta

Management's best laid plans went awry last year, but PIMCO Global Bond (U.S. Dollar-Hedged) is back in contention.

This fund's 3% loss in 2008 was among the more disappointing results in the world-bond category, especially so because other hedged funds made the most of the dollar's "safe-haven" surge last year. Read more

Kudos

Comes from a strong family: PIMCO is one of the best bond shops around.

Willingness to set its own course increases its chances of posting superior results.

Seasoned manager with exceptional resources at his disposal.

Below-average costs. Read more

Risks

Likely to underperform relative to other international-bond funds when the U.S. dollar is weak.

The fund's complex strategy, which makes extensive use of derivatives, is difficult to execute well and comes with real risks. Read more

Strategy

This fund doesn't take a lot of chances. Manager Scott Mather sticks close to the fund's benchmark in country and currency allocations. He starts with PIMCO's view of key market and economic factors and uses a mix of bonds and derivatives to take positions. Read more

Management

Scott Mather has replaced Sudi Mariappa in leading PIMCO's global portfolio management team. Mariappa had come to PIMCO in 2000 from Merrill Lynch but retired in early 2008. Mather, who joined the firm in 1998, also now manages the Analyst Pick PIMCO Foreign Bond duo, as well as this fund and its sibling. Read more

Inside Scoop

This conservative fund sticks close to the J.P. Morgan Global Government Index in country and currency risks, and although it has earned middle-of-the-road returns, it has done so with much less volatility than most of its world-bond rivals. Read more

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