HEAD-TO-HEAD: Amundi versus Pimco

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Investment approach

The Amundi Global Aggregate Fund invests globally and it has a wide range for manoeuvre, according to Dobrescu.

Duration is managed within zero to 1.5 times its Bloomberg Barclays Global Aggregate Bond Index benchmark’s duration, and the fund can have high yield exposure, including corporate and emerging markets sovereign bonds, of up to 20% of the portfolio.

The fund’s strategic themes are formalised by a committee made up of Laurent Crosnier and seven other senior portfolio managers. This leads to a model portfolio, which Crosnier then supplements with his own security selection and tactical, shorter-term shifts, which is expected to drive about one third of the fund’s added value over time, according to Dobrescu.

The managers take a top-down view on different currency blocks (US dollars, euro, yen, and commodity-related currencies) as well as within each block, for example, on the Swiss franc within the euro block, and can actively short currencies.

“Currency trades are a significant portion of the strategy and they are expected to make up around one third of the fund’s targeted tracking-error of 4.5% against the index,” said Dobrescu.

The Pimco GIS Income Fund, in contrast is more focused on the US bond market, although it can also invest globally.

“Like all Pimco strategies, this one relies on numerous top-down and bottom-up calls,” said Dobrescu.

“It has a particular taste for higher income areas, such as high yield corporate issues and non-agency mortgages; within non-agency RMBS, the team has concentrated on senior tranches of legacy assets whose fundamentals have improved over the years and has avoided new sectors such as non-qualified mortgages and credit-risk transfer debt that are less seasoned and untested,” she said.

The fund can also own significant positions in agency mortgage-backed securities (MBS), and managers have increased this exposure to almost 30% of assets in April for their defensive qualities.

“Both of these allocations (agency and non-agency MBS) are differentiating here and virtually absent from the Amundi product,” said Dobrescu.

“The Pimco fund can also use foreign exchange to add value tactically, but only to a limited extent,” she said.

The managers set a monthly dividend and attempt to stick with it for at least a year. Prudence demands that the number be set lower than what the portfolio’s holdings actually produce each month to avoid a shortfall, and the strategy has historically been successful, according to Dobrescu.

Fund characteristics:

Source: Morningstar, Fund factsheets

Top 10 holdings:

Source: Fund factsheets, 31 Mar 2021

Country allocation:

Source: Morningstar, Fund factsheets. *leverage in the portfolio means weightings exceed 100%

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