PIMCO GIS Glb Bd E EUR Hedged Acc

Analyst Report
Morningstar's Take
|27/10/2022

by Mara Dobrescu
PIMCO GIS Global Bond is backed by three skilled managers who draw on the firm’s extensive resources, and it benefits from a flexible, diversified approach. The strategy earns a Morningstar Analyst Rating of Gold on its cheaper share classes; the more expensive ones earn Silver and Bronze. (Since our previous review, several share classes have seen increases in representative costs, triggering a downgrade).

Lead manager Andrew Balls has a good deal of experience running global and European mandates, and the vast investment team, including veteran comanagers Sachin Gupta and Lorenzo Pagani, is well-equipped to cover rates, currencies, corporates, and structured credit. Pimco's top-down views--driven by the firm’s investment committee on which Balls sits--guide the strategy’s broad positioning. Within the scope of those themes, Balls and his team consider relative valuations to determine sector, country, and yield-curve positioning. The setup resembles that of many of its global bond Morningstar Category peers, but the approach of this strategy also allows for considerable flexibility. The fund has historically held up to half of its assets in corporate bonds, and up to a third in emerging-markets debt; it can also invest up to 10% in below-investment-grade bonds. The team has used this latitude well and in moderation along with its work in sovereign bonds, which typically anchor the portfolio. Andrew Balls has also tended to stay on the shorter side of the benchmark’s duration, a result of the team’s top-down macro views in recent years; the fund’s interest sensitivity came in at 5.5 years as of August 2022, 1.2 years shorter than the Bloomberg Global Aggregate Bond Index. This held back returns in the fund’s earlier history, but recently helped during periods of interest rate shocks (such as in the first quarter of 2021 and again over the first nine months of 2022). While the manager has recently reduced exposure to most credit-spread sectors, based on the group’s overall recognition that markets lack visibility for the short and medium term, Pimco has demonstrated skill in corporate credit, securitized bonds and currencies over long periods. These performance drivers remain key to the toolset here.

Over the trailing three, five and 10 years through September 2022, the fund’s Institutional USD shares have largely outpaced both the category average and the benchmark index, while keeping volatility in check. All told, this team is well-equipped to take advantage of the strategy’s flexibility over the long haul.
 
Morningstar Medalist Rating™Compelling.
To find out how Morningstar rates a fund click here.
Morningstar Pillars
PeopleHigh
ParentAbove Average
ProcessHigh
 
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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