PIMCO Commodity Real Ret Strat InstlPCRIX

Morningstar Rating

Fund Research and Analysis

by Arijit Dutta

PIMCO Commodity RealReturn Strategy is on the comeback trail.

Last year's market meltdown helped illustrate both this fund's good and bad sides. The fund's 44% slump in 2008 was no doubt brutal, but it lost less than a vast majority of its natural-resources peers. Read more

Kudos

Offers broad exposure to commodities.

PIMCO has a good track record of enhancing index returns through adroit use of derivatives and bonds. Read more

Risks

The fund's TIPS portfolio introduces some interest-rate risk and makes the fund a poor fit for investors seeking a pure play on commodities, as evidenced in 2008.

Won't march with the natural-resources pack.

The fund's expense ratio hasn't come down as assets have increased. Read more

Strategy

This fund invests in derivative instruments that seek to replicate the performance of the Dow Jones-AIG Commodity Index. Because the fund's use of derivatives can gain full exposure to the index with only a portion of assets, the remaining assets are invested in a TIPS-heavy bond portfolio (which can also contain government agency, nongovernment, and corporate securities). Read more

Management

John Brynjolfsson, who managed this fund since its 2002 inception, stepped down in 2008. Mihir Worah, who has worked on the fund since 2003, took the reins of this fund and Brynjolfsson's other former charge, PIMCO Real Return PRTNX, in December 2007. Read more

Inside Scoop

This fund is an odd bird. Instead of investing in the stocks of companies that produce natural resources, it invests in securities that tie returns to the swings in commodities' prices themselves. Read more

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