Morningstar - Q1 2020 - 53

A Disciplined Winner
Pimco CommoditiesPLUS Strategy provides commodity
exposure with an energy tilt.
BEST IDEAS: MANAGER

Miriam Sjoblom

Pimco CommoditiesPLUS Strategy PCLIX

This article is adapted from the fund's Morningstar Global Fund Report dated
Jan. 2, 2020.

Stats 12/31/2019

Pimco CommoditiesPLUS Strategy PCLIX earns a Morningstar Analyst Rating
of Silver on all share classes but its most expensive; the C shares are
rated Bronze. Its edge lies in its managers' knack for consistently beating its
index with measured active bets and a disciplined approach to portfolio
construction and execution.
The strategy is benchmarked against the Credit Suisse Commodity Benchmark
Index, more than half of which is devoted to energy commodities. That
sets it apart from most peers in the commodities broad-basket Morningstar
Category that track the Bloomberg Commodity Index, whose energy
exposure is roughly a third. That difference has proved costly here in periods of
declining oil prices, such as 2018's fourth quarter, when the fund's 20.1%
loss ranked among the category's worst. Rising oil prices have turbocharged
the strategy's returns at times, though, including 2019. The Credit Suisse
index's 19.9% gain more than doubled that of the Bloomberg index during that
period, and the 20.4% gain of the fund's institutional shares topped its
benchmark and all but one of its peers.
For those willing to ride out the volatility that comes with this energy-heavy
profile, the strategy's skilled team plies a disciplined approach that's tough to
beat. Targeting 2% to 3% annual tracking error, managers Nic Johnson
and Greg Sharenow try to add value by assembling a diversified portfolio of
20 to 30 trades at a time, resulting in modest under- and overweightings
versus their benchmark. Those include fundamentally researched calls on
individual commodity valuations as well as systematic trades based on factors
such as futures roll yields, storage cost differentials, and seasonality.
The team runs the strategy's bond portfolio in a style similar to that of Pimco
Short-Term PTSHX, with minimal interest-rate risk and moderate credit risk.
It's a testament to the strength of the team's approach that the strategy's
active commodity trades have added value versus the index in eight out
of nine calendar years since its mid-2010 inception, amounting to a roughly
1.5-percentage-point advantage per year over the bogy. It remains a
strong choice. K
Miriam Sjoblom is director, fixed-income ratings, global manager research with Morningstar.

Morningstar Analyst Rating
*

Morningstar Category
Expense Ratio
Commodities Broad Basket 0.81%

Fee Level
Below Avg

5-Yr Annlzd Return
-0.15%

5-Yr % Rank in Cat
1

Morningstar Pillars 12/31/2019
Process
Above Avg

People
Above Avg

Parent
Above Avg

Growth of 10K 09/30/2019

$14K

Pimco CommoditiesPLUS Strategy

11.62
10.45

Morningstar Long-Only Commodity
01/2017

01/2018

01/2019

Asset Allocation 09/30/2019
22.6%
45.8%
31.6%

Morningstar Ratings 12/31/2019

Other
Cash
Bonds
U.S. Equities
Non-U.S. Equities

Period

Mstar
Return

Mstar
Risk

Mstar
Rating

3-Yr

High

QQQQQ

5-Yr

High

Above Avg QQQQ

10-Yr

-
QQQQ

Overall Rating
Top 5 Fixed-Income Sectors 11/30/2019

Sectors
Agency MBS Pass-Through

■ Fund

❙ Category Average

Corporate Bond

3.9

Asset-Backed

1.5 5.8

Treasury

6.7
12.3

12.2

5.3

Inflation-Protected

3-Yr Avg
18.0

2.5

4.2

7.3

5.6
7.8

4.4 4.4

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Morningstar - Q1 2020

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