PIMCO Global Bond (Unhedged) InstlPIGLX

Morningstar Rating

Fund Research and Analysis

by Arijit Dutta

Management's best laid plans went awry last year, but PIMCO Global Bond (Unhedged) is back in contention.

This fund's 3% loss in 2008 was among the more disappointing results in the world-bond category. The portfolio's overall quality bias and emphasis on shorter-maturity bonds were both correct calls, but a sizable bet on financial debt and nonagency mortgage-backed securities undermined the fund's campaign. 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. Read more

Risks

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

While the fund's fully unhedged currency exposure bolsters its diversification value, it also increases volatility. Read more

Strategy

This fund's strategy is fairly straightforward. It doesn't hedge its currency exposure, and it doesn't make huge bets against the J.P. Morgan Global Government Bond Index, which contains a large weighting in U. 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

As its name suggests, this fund invests all over the world, including the United States. The fund's exposure to foreign currencies can hurt when the dollar is strong. Read more

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