uploads///chart

PLVVX’s Multiple Strategies Bring Low Volatility, Potential Gain

By

Dec. 29 2015, Updated 12:05 a.m. ET

Dual strategy portfolio

The PIMCO RAE Low Volatility Plus Emerging Fund Class A (PLVVX) is an alternative mutual fund that benchmarks its performance to the MSCI Emerging Markets Index. It constructs a portfolio based on Research Affiliates Equity (or RAE) low volatility and AR (absolute return) bond alpha strategy.

Using multiple strategies helps PLVVX have low volatility in the market with the potential to gain capital appreciation in the market. The first strategy exposes the fund to emerging market economies. The second seeks to maintain an overall portfolio duration that normally varies from negative three years to positive eight years, based on PIMCO’s forecast for interest rates among other factors.

Article continues below advertisement

PLVVX versus Lipper funds

The above graph compares the current year-to-date (or YTD) and the previous year’s annual return of PLVVX with the average returns of the Lipper Emerging Markets Funds. The market returns of PLVVX have failed to beat the returns of the Lipper Emerging Markets Funds.

You should also note the drastic change in the current returns of PLVVX and the Lipper funds compared to the previous year’s returns. The strengthening of the dollar and the fall in crude oil prices are the primary reasons for the adverse growth in emerging markets.

Dividend yield

PLVVX’s average dividend yield is 3.9%. That’s 35% higher than the average dividend yield of funds with similar holdings. PLVVX declares a quarterly dividend. PLVVX’s portfolio holdings include mortgage-backed and asset-backed securities of trusts such as subsidiaries of Citigroup (C), Credit Suisse (CS), Merrill Lynch (IPB), Morgan Stanley (MS), JPMorgan (JPM), and others.

In the next article of this series, we’ll take a close look at PLVVX’s holdings.

Advertisement

More From Market Realist

  • Open sign on a sidewalk
    Macroeconomic Analysis
    Top Reopening Stocks to Play the Shifting Market Sentiment
  • Morgan Stanley sign and stock numbers
    Macroeconomic Analysis
    Morgan Stanley's Buyback Stock Picks in 2021
  • Black Wall Street sign is sign of ethical investing
    Macroeconomic Analysis
    Ethical Investing Stocks and Funds for Your 2021 Portfolio
  • New York City skyline and Goldman Sachs logo
    Macroeconomic Analysis
    Goldman Sachs: Options Trade Picks to Play Earnings Season Volatility
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.