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How Has PCRIX Performed in the Market in 2015?

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Nov. 20 2020, Updated 1:39 p.m. ET

Real return strategy

The PIMCO Commodity Real Return Strategy Fund (PCRIX), an alternative mutual fund, has suffered a severe setback in its market performance this year due to the weakening of the global energy and commodity market.

According to PCRIX’s website, the fund uses PIMCO’s distinct Double Real approach, which invests both in the commodity market through various derivative instruments and in the fixed income market through Treasury inflation-protected securities (or TIPS). The fund’s primary investment objective is to enhance the return from commodity-linked investing through regular income from TIPS.

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Hypothetical growth analysis

The above graph compares the hypothetical growth of $100 invested simultaneously in PCRIX and the market S&P 500 (SPY) from January 1, 2015, onward. PCRIX, as already mentioned, has fallen considerably this year.

It can be noted in the above graph that a major deviation in PCRIX’s and SPY’s performances came during the period of June to July 2015, when news of the global economic fall and China’s slowdown came around. Since then, the deviation has only intensified.

Top holdings

PCRIX’s top ten holdings represent 70.2% of its total portfolio. Hence, PCRIX’s performance in the market is largely dependent on the performances of its top holdings. PCRIX has corporate bonds and borrows from many large-capitalization companies. AT&T (T), Lloyds Banking (LYG), Bank of America (BAC), and J.P. Morgan Securities (JPM) are among its major holdings.

In the next part of the series, we’ll understand the investment methodology of PCRIX.

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