Posted inHead To Head

HEAD-TO-HEAD: Axa vs Pimco

FSA compares two inflation-linked bond funds: the Axa World Funds Global Inflation Bonds Fund and The Pimco GIS Global Real Return Fund.
by Fund Selector Asia
Conclusion

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“The Pimco fund would be more appropriate for adventurous investors who might be willing to tolerate short periods of underperformance,” said Dobrescu. The fund experienced a net loss of 2.2% in 2015, which many investors would not expect of a bond fund.

“The Axa fund is definitely more defensive,” she said. “It is meant for investors who don’t want to stray away too much from the benchmark.” On the other hand, “it also means that the fund is not likely to outperform the benchmark,” she added.

The long average duration of around 12 years is a risk for both portfolios, she noted.

“For the Axa fund there are no particular [other] areas of concern because the allocation is quite close to the benchmark,” she said.

The Pimco fund’s currency overlay adds some currency risk. Another source of additional risk is the fund’s use of asset-backed securities, which tend to be more volatile, and its wider use of derivatives.

The Morningstar Analyst Rating of Bronze for the Pimco fund and Neutral for the Axa fund reflects Dobrescu’s and the firm’s view that the Pimco fund represents a better option, thanks to its more active approach and a decent performance record. The fund’s inability to outperform its benchmark as well as its higher price, however, are the two main factors that have prevented it from earning a higher rating.

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