PIMCO Interval Fund

Where PIMCO Sees Attractive Opportunities

PIMCO recently launched the Flexible Credit Income Fund(PFLEX). The fund has a a flexible mandate to capitalize on a variety of credit market opportunities. On the fund’s website, PIMCO describes the opportunities it is expecting to find:

Q: Where do you see attractive opportunities for the Flexible Credit Income Fund today and in the future?
A: While we believe valuations on many traditional credit sectors (investment grade, high yield and bank loans) are relatively fair at current levels, we are seeing several robust opportunities today.
First, despite strong performance in U.S. real estate markets since the financial crisis, we continue to find value in both public and private mortgage debt, especially on the residential side. These opportunities include traditional legacy non-agency mortgage-backed securities (MBS), legacy loans that Fannie Mae and Freddie Mac continue to dispose, and opportunities to purchase newer origination non-agency mortgage loans directly. (We see many loans being made at significantly high interest rates given the regulatory burden associated with making non-traditional loans.)

Comparing Interval Funds to Open-End Mutual Funds

Interval Funds have several key similarities with open-end mutual funds, but they are not identical.   Mutual funds and interval funds both offer shares on a continuous basis at NAV.  Mutual funds and interval funds are both “40 Act Funds” that provide investor protections from the Investment Company Act of 1940.   Mutual funds by definition allow daily redemptions, but interval Funds provide limited liquidity at set intervals.  This diagram, from the recently launched Sierra Total Return Fund, compares and contrasts Open-End Mutual Funds, Closed-End Funds, and Interval Funds:

Investors May Soon Be Hearing More About Interval Funds

Recent links:
What are Interval Funds? – Wall Street Journal

Some researchers think there will be both a need and a demand for exposure to such assets in the near future. Low returns from traditional investments by historical standards will lead to a “steady stream of assets moving into alternative investments,” says a 2016 report from consulting firm McKinsey & Co. “These flows will be redirected heavily toward illiquid private markets.”

Interval funds may also provide a boost for financial advisers in a world where passive investing in funds that track market indexes is the rage.

“What retail investors now hold is largely a portfolio of passive exchange-traded funds, so the alternative-assets domain is how the adviser will add value to the client,” says Kimberly Flynn, managing director of XA Investments LLC in Chicago.

Alts offer a new course- – Financial Advisor Magazine

Pioneer ILS Interval fund hits $305m, some loss impact in half-year -Artemis

Also, registration is still open for the Adisa Due Diligence Forum. This event is designed for industry professionals who are employed with a Broker-Dealer, RIA, Family Office, Due Diligence Firm, or select others, that offer alternative investments in their business.

Blackstone Prepares For Interval Fund Launch

Blackstone/GSO registered a new interval fund on June 30. The Blackstone/GSO Floating Rate Enhanced Income Fund intends to follow a familiar credit strategy, focused on floating rate loans in a rising interest rate environment. It may also invest 20% of assets into structured products, warrants/equity securities, and other related instruments. Blackstone’s interval fund will have […]

RBC Subsidiary Launches Reinsurance Fund

The SEC declared the registration statement effective for The City National Rochdale Select Strategies Fund（CNRLX ) on June 22, 2017. CNRLX is seeking to raise up to $500 million.  This reinsurance fund focuses on insurance linked securities(ILS) and reinsurance space, and is structured as an interval fund. CNRLX will focus on reinsurance investments providing exposure […]

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