PIMCO Municipal Bond InstlPFMIX

Morningstar Rating

Fund Research and Analysis

by Lawrence Jones

PIMCO Municipal Bond's management has taken the first steps toward orchestrating a recovery.

After a dismal year in 2008 under former management, this fund's new skipper, John Cummings--with the market's cooperation--has put together the beginnings of a recovery. Read more

Kudos

Experienced management. Read more

Risks

The fund previously used interest-rate swaps and other derivatives that magnified volatility and losses, but this approach has been reined in.

Below-average yield.

The no-load, A, B, and C share classes sport hefty expense ratios, which eat into the fund's income and total return. Read more

Strategy

This fund applies PIMCO's total-return approach to a portfolio of municipal bonds from multiple states. The firm's macroeconomic forecast is used to set duration (a measure of interest-rate sensitivity), although it is typically kept within one year of the fund's benchmark, the Barclays Capital Municipal Bond Index. Read more

Management

John Cummings, who joined PIMCO in 2002, and is now the lead portfolio manager for all of the firm's municipal-bond funds, replaced Mark McCray, who has moved on to other duties at the firm. Cummings has been responsible for PIMCO's high-yield muni accounts, as well as municipal positions in PIMCO Total Return PTTRX. Read more

Inside Scoop

While PIMCO's vaunted macroeconomic forecasts are used to manage duration and rotate among sectors, investors in search of stability were disappointed here in 2008. Read more

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