The FSA Spy market buzz – 26 April 2024
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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.
Golden mystery, Next big Healthtech thing, Plastic everywhere, The Magnificent Seven wane, Dreary fund presentation hell, Putting The Economist in its place, A touch of Shakespeare and much more.
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