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Is PIMCO Allocation Asset A (PASAX) a Strong Mutual Fund Pick Right Now?

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If investors are looking at the Allocation Balanced fund category, PIMCO Allocation Asset A (PASAX - Free Report) could be a potential option. PASAX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

PASAX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.

History of Fund/Manager

PIMCO Funds is based in Newport Beach, CA, and is the manager of PASAX. The PIMCO Allocation Asset A made its debut in July of 2002 and PASAX has managed to accumulate roughly $911.28 million in assets, as of the most recently available information. Robert D. Arnott is the fund's current manager and has held that role since July of 2002.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 4.19%, and it sits in the bottom third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 6.22%, which places it in the bottom third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. PASAX's standard deviation over the past three years is 5.44% compared to the category average of -36.2%. Over the past 5 years, the standard deviation of the fund is 6.96% compared to the category average of 0.13%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. PASAX lost 23.42% in the most recent bear market and outperformed its peer group by 53%. This makes the fund a possibly better choice than its peers during a sliding market environment.

Even still, the fund has a 5-year beta of 0.37, so investors should note that it is hypothetically less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. The fund has produced a negative alpha over the past 5 years of -0.71, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, PASAX is a load fund. It has an expense ratio of 0.53% compared to the category average of -23.42%. PASAX is actually more expensive than its peers when you consider factors like cost.

While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $50.

Bottom Line

Overall, PIMCO Allocation Asset A ( PASAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, worse downside risk, and higher fees, PIMCO Allocation Asset A ( PASAX ) looks like a good potential choice for investors right now.

For additional information on the Allocation Balanced area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PASAX too for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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