4 Best-Performing PIMCO Mutual Funds for September

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Founded in 1971, Pacific Investment Management Company, LLC or PIMCO is an internationally acclaimed investment management firm. The company provides a wide range of financial services across the globe with the help of more than 3,050 employees. PIMCO had around $2.2 trillion assets under management as of Jun 30, 2020.

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PIMCO offers a broad lineup of investment solutions for the entire gamut of equities, bonds, currencies, real estate, alternative investments and risk-management services. Though the firm manages an array of mutual funds, it is best known for those based on fixed income.

The fund house invests in a variety of sectors that are sensitive, cyclical and defensive. From the sensitive sectors, most investments have been made in the technology sector. Among the cyclical sectors, the fund family has invested the maximum in the financial services sector, while among the defensive sectors it has invested heavily in healthcare.

Technology Select Sector SPDR (XLK) has climbed 32.5% over the past year. Financial Select Sector SPDR Fund (XLF), meanwhile, surged 53.6% in the same period and turned up as the best-performing sector among the 11 S&P 500 sectors.

4 Best Funds to Buy Now

We have highlighted four PIMCO mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging one and three-year returns. Additionally, the minimum initial investment is within $5000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking their money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

PIMCO High Yield Municipal Bond Fund Class A PYMAX invests the major portion of its assets in debt securities that are expected to provide income free from federal income tax. PYMAX may invest in investment grade municipal bonds and not more than 30% of its assets in “private activity” bonds.

This Zacks Muni-Bonds product has a history of positive total returns for over 10 years. Specifically, the fund’s returns over the one and three-year benchmarks are 9.7% and 6.9%, respectively. The fund carries a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.93%.

PIMCO Low Duration Income Fund Class A PFIAX fund aims to maximize current income as its primary objective. The fund also aims for appreciation of capital in the long run. PFIAX invests a minimum of 65% of its assets in multi-sector portfolio of fixed-income securities of varying maturities. It may also invest up to 30% of its total assets in high yield securities that are rated below investment grade Moody’s, S&P or Fitch, or if unrated, as determined by PIMCO.

This Zacks Govt Mtge-Short product has a history of positive total returns for more than 10 years. PFIAX sports a Zacks Mutual Fund Rank #1 and has an annual expense ratio of 0.95%. The fund has one and three-year returns of 6% and 3.9%, respectively.

PIMCO High Yield Spectrum Fund Class A PHSAX seeks maximum total return that is consistent with prudent investment management. The fund invests the lion’s share of its assets in junk bonds such as convertibles, warrants, forwards or derivatives like swap agreements.

This Zacks High Yield Bonds product has a history of positive total returns for more than 10 years. PHSAX carries a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.97%. The fund has one and three-year returns of 10.5% and 6.2%, respectively.

PIMCO Fixed Income SHares: Series M FXIMX fund aims for maximum total return along with the preservation of capital and prudent investment management. The fund invests the majority of its assets in a portfolio of domestic and foreign fixed income instruments of varying maturities that include mortgage- and other asset-backed securities, corporate debt securities, and floating and variable rate debt instruments.

This Zacks Diversified Bonds product has a history of positive total returns for more than 10 years. FXIMX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.02%. The fund has one and three-year returns of 5.1% and 7.2%, respectively.

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