This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

PIMCO Unconstrained: Betting on Rising Rates

Stocks in this article: PTTDX PUBDX

PIMCO Unconstrained has more leeway to maneuver. Late in 2010, the fund lowered its duration close to zero. So if rates rise, the fund may not suffer any losses.

This year, rates have fallen a bit. That has penalized the unconstrained fund. "We were too early," says portfolio manager Chris Dialynas. "We would have been better off if we didn't reduce the duration to zero."

So far this year, the unconstrained fund has returned 1.1%, trailing the PIMCO Total Return at 3.0%. The Barclays benchmark has returned 2.7%.

Not all the strategies of PIMCO Unconstrained have failed. Convinced that bank balance sheets are improving, the fund has been holding bonds from financial companies. That has helped to boost returns. The fund also scored gains with taxable municipal bonds from California.

Despite the mixed showing of PIMCO Unconstrained, investors have poured into the fund. The portfolio has $16 billion in assets, a big showing for a fund that launched less than three years ago. Investors have turned to the fund because they seek protection from rising rates.

No-Load Fund Analyst, a respected newsletter, recommends that investors own both PIMCO Unconstrained and PIMCO Total Return. The newsletter argues that the unconstrained fund should deliver strong returns because it represents PIMCO's best thinking -- without benchmark restraints. If the unconstrained fund is so versatile, why bother with PIMCO Total Return? The newsletter says that holding the two funds together provides some diversification. If the economy suffers a shock and interest rates sink, PIMCO Total Return could provide positive returns. The relatively staid approach of the flagship PIMCO fund could provide the ballast that many portfolios need.

Readers Also Like:

Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.
2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs