Forex to the fore as Pimco tackles emerging markets

Pacific Investment Management Co. LLC launched the Pimco Emerging Markets Full Spectrum Fund (PFSIX) last Monday, making it easier for financial advisers to get access to all the flavors of emerging-markets debt.

Pimco already offers the $14 billion Pimco Emerging Local Bond Fund (PELBX), which invests only in emerging-markets bonds denominated in the local currency. The $7.9 billion Pimco Emerging Markets Bond Fund (PEBIX) invests only in dollar-denominated emerging-markets bonds, and the $6.8 billion Pimco Emerging Markets Currency Fund (PLMIX) invests solely in emerging-markets currencies.

The Full Spectrum fund will combine the strategies of Pimco’s three existing emerging-markets-bond funds. Portfolio manager Michael Gomez, who also oversees the three existing funds, will be able to choose among local-currency bonds, dollar-denominated bonds and currencies.

“RANGE OF CHOICES’

“Many fast-growing emerging markets offer investors a range of choices, such as undervalued currencies, attractive yields in local bond markets, the improving credit quality of sovereign debt or the higher yields of corporate bonds. But identifying and capturing the best opportunities requires a dynamic-asset-allocation framework and robust risk management,” Mr. Gomez said in a statement.

Emerging-markets bonds gained popularity last year, thanks to 4% to 5% yields and better credit outlook.

Assets in the funds rose 60% to $80 billion, up from $50 billion in 2011, according to Morningstar Inc.

But Pimco argues that many investors are still holding back.

One-third of advisers plan to increase their allocation to emerging-markets debt this year, according to the InvestmentNews 2013 Investment Outlook survey, in which 592 advisers participated. Just under half said that they plan to keep their allocations the same this year.