Lux Investing
Why does my PIMCO High Yield Account say it invests in energy but hold bonds from Wachovia and Bank of America?
I am choosing which 401K accounts to invest in. Under "Industry Sectors" the PIMCO High Yield Account says "Energy 100%" as its "Long %". However, under Top Ten Holdings, it lists Wachovia, Bank of America, First Data, Qwest Comms Intl and other companies that have nothing to do with energy. (It also lists some Energy Future Holdings.) Why is this?
Public Comments
- PIMCO High Income Fund primarily invests in the U.S. dollar-denominated corporate debt obligations and other income-producing securities. The fund primarily invests in various companies operating in the areas of energy, real estate, telecommunications, manufacturing, and utilities, as well as invests in various foreign investments. Not 100% energy.
- Something you need to understand is that Morningstar and fund descriptions are wrong. The mutual fund just needs to be classified, so this is set up initially. However, through the course of the funds continuance. There will be variations on what they are invested in. It's not uncommon for mutual funds to state that they are 100% long-term growth. However, if the prospectus and information for the fund is changed. That doesn't change the classification of the fund. Goto Morningstar and research the top 5 small cap growth funds. You might find that they don't have $1.00 invested in a small cap company. It's good that you read the top 10 investments. You should continue to do this throughout. Most individuals will chase the return of the fund, not even knowing what or how the fund is allocated. This compounds dissolution of a portfolio, and could cause over-weighted positions. Just my two cents.
