PIMCO StocksPLUS InstlPSTKX

Morningstar Rating

Fund Research and Analysis

by Lawrence Jones

PIMCO StocksPLUS rebounded strongly from its troubles and is on its guard.

The financial crisis spelled trouble for this fund in late 2008. The "portable alpha" approach used here by famed bond manager Bill Gross and his team seeks to best the return of the S&P 500 Index. Read more

Kudos

Creative, compelling strategy.

Managed by a team that has won Morningstar's Fixed-Income Manager of the Year award. Read more

Risks

More expensive and less tax-efficient than plain-vanilla index funds.

When the fund's underlying fixed-income portfolio underperforms, as it did in 2008, overall performance can greatly lag the benchmark. Read more

Strategy

This fund is one of a handful of enhanced S&P 500 Index funds. Instead of buying the underlying stocks in the index, it buys futures and enters into swaps to provide exposure to the price changes of the index. Read more

Management

The management of the underlying bond assets will make or break this fund. Fortunately, PIMCO's Bill Gross is one of the best bond managers in the industry. He also runs the highly successful PIMCO Total Return PTTRX. Mihir Worah, who is responsible for equity-derivatives trading at the firm, and Paul McCulley, who leads its short-term desk, also make meaningful contributions here. Read more

Inside Scoop

This enhanced index fund tries to best the S&P 500 by buying futures and investing the cash backing them in bonds. Read more

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