Analyst Report
Morningstar's Take

by Jeana Marie Doubell
Pimco Euro Bond’s strengths are rooted in the depth and experience of its team, and its wide-ranging approach to alpha generation.

This strategy boasts a trio of skilled and seasoned managers. Lead manager and industry veteran Lorenzo Pagani joined the management roster here in 2014. He was promoted to lead manager in 2017, when his predecessor Andrew Balls took on the role of Pimco’s head of global fixed income. (Balls is still a valuable backup comanager for the strategy.) Pagani’s workload is significant: In addition to his duties here, he comanages the firm’s global bond and global inflation-linked bond strategies. However, we are comforted by the resources backing him; in addition to Balls, Pagani is supported by comanager Konstatein Veit, who assists with the day-to-day responsibilities. Veit formally joined the roster in 2021, but has worked at Pimco in the fixed-income team for 13 years and currently serves as head of its European rates desk. Furthermore, Pagani and his team rely on a group of 40 portfolio managers specializing in European rates, currencies, and corporate and securitized credit, along with more than 80 credit analysts globally.

Aiming to outperform the FTSE Euro Broad Investment Grade Index, Pagani actively manages the fund’s duration, interest-rate curve positioning, and country exposures, as well as its allocation to government, corporate, and securitized debt. The team also dabbles outside the investment grade euro-denominated bond universe in emerging-markets debt, asset-backed securities, and currencies (though the latter are limited to 10% of the fund’s overall risk budget) and makes extensive use of derivatives.

The fund boasts an attractive long-term record. Though it stumbled uncharacteristically in 2021 and 2022 because of to overweightings in rates-sensitive Danish mortgage bonds and Spanish debt, its institutional share class’ 10 and 15-year returns through March 2024 beat 90% of peers in the EUR diversified bond Morningstar Category, as well as its benchmark. We remain confident in its experienced management, deep resources, and proven investment approach.
Morningstar Medalist Rating™A strong team drives this dynamic process.
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Morningstar Pillars
ParentAbove Average
Morningstar Medalist RatingMorningstar assigns the Medalist Rating to funds that are qualitatively and quantitatively assessed through manager research and algorithmic processes. The assessment turns on three key “pillars” – People, Process, and Parent – that yield an estimate of how well a fund will perform before fees but after adjusting for risk.
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