The PIMCO RAE Fundamental PLUS EMG Fund
The PIMCO RAE Fundamental PLUS EMG Fund adopts a smart beta approach while investing in stocks of companies located in emerging market nations. It applies the RAE (Research Affiliates Equity) Fundamental investment strategy and aims to outdo the MSCI Emerging Markets Index and also provide “an additional source of return potential” as stated in the fund literature. Unlike other funds in this series, it employs portfolio derivatives backed by an actively managed portfolio of fixed income securities.
The fund was launched in November 2008 while the A share class (PEFFX) has been in existence only since May 2013. As of the end of November 2016, it had been managing assets worth $1.35 billion. Meanwhile, as of September-end – the latest complete portfolio available – it was invested in 509 securities. The fund is managed by Mohsen Fahmi, Sudi Mariappa, and Robert Arnott.
The PIMCO RAE Fundamental PLUS EMG Fund – Class A (PEFFX) has had a terrific run this year with returns of 36.7% in YTD 2016 until December 12. It is one of the few funds to have posted gains in the three year period as most of its peers in the emerging market category have fallen in the period.
Sectoral and geographic breakdown
Compared to the MSCI Emerging Markets Index’s (Net Dividends in USD) 816 stocks, the PEFFX is invested in just 509 securities. The fund’s median market cap is lower at $7.8 billion as compared to the index’s $9.8 billion.
Geographically, China is the most invested country with over a quarter of the fund’s portfolio allocated to Chinese stocks. South Korea and Taiwan follow, in that order, and are the only other countries whose portfolio weight reads in double digits. India and Brazil round-off the top five invested geographies.
In terms of sectoral composition, the PEFFX has over 30% of its assets invested in financials. The energy sector follows, making up 18% of the portfolio. Materials, telecom services, and information technology round-off the top five invested sectors by the fund. Though financials is the top invested sector of the benchmark index as well, information technology commands the second spot in the index composition with consumer discretionary placed third.
Fees and minimums
In case you’re interested in investing in the fund, you’d require a minimum initial investment of $1,000. You can add to your investment in multiples of $50. For Class A shares, the fund house can levy a maximum sales charge of 3.75% as a percentage of the offered price. The expense ratio of the fund is 1.55%.