PIMCO Corporate & Income Opportunity Fund $PTY ( ▲ 0.42% )
The PIMCO Corporate & Income Opportunity Fund, a closed-end fund (CEF), can be appealing for income-focused investors seeking high yields and potential total return. Managed by PIMCO, a leading fixed-income investment firm, PTY offers a unique blend of income generation and capital appreciation through a diversified portfolio of fixed-income securities. From their website:
Using a dynamic asset allocation strategy that focuses on duration management, credit quality analysis, risk management techniques, and broad diversification among issuers, industries and sectors, the fund seeks maximum total return through a combination of current income and capital appreciation.
Under normal market conditions, the Fund seeks to achieve its investment objective by investing at least 80% of its net assets plus borrowings for investment purposes in a combination of corporate debt obligations of varying maturities, other corporate income-producing securities, and income-producing securities of non-corporate issuers, such as U.S. Government securities, municipal securities and mortgage-backed and other asset-backed securities issued on a public or private basis.
The fund may invest a maximum of 25% of its total assets in non-U.S.-dollar-denominated securities and a maximum of 40% of its total assets in securities of issuers located in emerging market countries. The fund will normally maintain an average portfolio duration of between zero and eight years.
While not beating the S&P 500 over the long-term, PTY has delivered strong performance for a fixed-income (bond) fund. As a closed-end-fund (CEF), the fund’s managers can use leverage to enhance returns (and risk). Bond funds will do well in declining rate environments. PTY pays a monthly dividend, currently over 10%, and offers diversification when added to an income portfolio of stocks.
