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Summary and Conclusion
 Pimco All Asset is a fund of other Pimco funds. Pimco uses Research Affiliates
as the sub-advisor for the fund. Rob Arnott, President of Research Affiliates
manages the fund using a quantitative approaches to identify areas that he
perceives are mispriced in the market. Rob then allocates the funds assets
primarily among 14 different Pimco funds to over- and underweight those areas.
The fund's expense ratio as reported by the mutual fund rating services is 0.87%, a bit below the average of similar funds (again as defined by the rating services - in actuality there are few funds that are similar) of 0.95%. However, a better gauge of expenses is to include the expenses charged by the underlying Pimco funds as well. Based on this calculation the expense ratio is capped at 1.50%, somewhat higher than the average for all mutual funds of 1.40%.
Wouldn't it be cheaper just to buy the underlying Pimco funds ourselves? The short answer is yes, but while we normally prefer to make our own asset allocation decisions, there are some very good reasons to invest with Rob. First, many of the areas that the fund invests in, such as Real Estate, Commodities and TIPS are relatively illiquid asset classes that can become over or undervalued extremely quickly (as we saw in April when the REIT market fell by over 14% in one month!). By prospectus, Rob is allowed to move his assets into and out of these funds at will with no trading restrictions and/or redemption fees. We and every other advisor, on the other hand, would face these obstacles and most likely be restricted from trading these accounts after a few round trips into and out of the investments over short-term time periods.
Second, we know Rob well and trust his skills. We don’t agree with everything Rob thinks. And like anyone, he isn't always right. But we would definitely say that Rob is far more right than wrong. And, as he quickly points out, more important he’s right for the right reasons. Moreover, as the performance table shows, so far he has more than earned his keep.
In short, the fund provides a unique, hedge fund like exposure that can enhance risk adjusted performance with a price tag far below the typical hedge fund. Couple Rob’s abilities with PIMCO’s credit research, yield curve management and trading capabilities, and we believe All Asset can provide valuable exposure to a diversified portfolio.  |
