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A Closer Look at PCRIX’s Portfolio Holdings

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Commodity-linked investments and fixed income securities

The PIMCO Commodity Real Return Strategy Fund (PCRIX) seeks to achieve its investment objective by investing in a divided portfolio of commodity-linked investments. These investments include various derivative debt instruments of commodity and inflation-indexed securities and other fixed income instruments such as bonds, notes, and treasury bills.

According to the prospectus of the fund, “real return” equals total return less the estimated cost of inflation, which is typically measured by the change in an official inflation measure. A detailed holdings breakdown of PCRIX is given in the above graph.

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Holdings analysis

PCRIX is managed by PIMCO, a popular investment management company, in the S&P 500 (SPY). PCRIX is majorly invested in the corporate bonds of various companies such as Citigroup (C), Credit Suisse (CS), Hewlett-Packard (HPQ), AT&T (T), and Lloyds Banking (LYG).

Other securities PCRIX invests in are US Treasury obligations and mortgages. 71% of PCRIX’s total portfolio is invested in various fixed income securities. PCRIX’s other major holdings include borrowings and derivative instruments.

Borrowings are primarily reverse repurchase agreements with companies such as Bank of America (BAC), RBS Securities (RBS), and J.P. Morgan Securities (JPM).

Derivative instruments mainly include commodity-linked investments such as exchange traded (or futures) contracts of Chicago Board of Trade corn, NYMEX Brent crude, NYMEX natural gas, and over-the-counter financial derivatives (or forward contracts) of various currency pairs.

In the next part of the series, we’ll study the current commodity market scenario for PCRIX.

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