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PIMCO Commodity Real Return Fund


Despite its standing as the world’s top commodity fund based on assets, it still seems most investors are unaware that Pimco offers an excellent commodities mutual fund, the Commodity Real Return Fund. Many investors still seek out the Rogers fund based on Jim Rogers’ name recognition, but Pimco’s entry is also an index-based commodity fund, and it’s one we hold in very high regard.

To view details on the only three true commodity funds available today (most “commodity-related” funds invest in stocks of energy-based companies, not the physical commodities themselves), a comparison can be found in Commodity Funds Comparison. Alternatively, readers can request more information on any of these funds from investment advisors, highly-experienced industry professionals we have found that know these investments very well.

About Pimco’s Commodity Real Return Fund:

The Fund uses commodity-index-linked derivative instruments, such as commodity swap agreements, to gain 100% exposure to the investment return of the Dow Jones AIG Commodity Total Return Index (DJAIGCTRI)— a well-balanced and widely followed measure of commodity prices. The Fund fully collateralizes the commodity-index-linked derivative instruments by investing its assets in an actively-managed portfolio of inflation-indexed bonds and other fixed-income securities. Inflation-indexed bonds offer a return that is linked to changes in the rate of inflation. As a result, the Fund attempts to employ a "Double RealTM" strategy, seeking to capitalize on the inflation-hedging properties of both commodities and inflation-indexed bonds. Thus far, the result has been a fund whose performance has exceeded its own benchmark index.

Like the Rogers Raw Materials Fund, Pimco’s commodity fund is based on an index, so the investor has little exposure to management-related investment mistakes; the performance of these funds will simply mimic the performance of commodities in general.

Unlike the Rogers Fund, which is a stand-alone product, investors in this vehicle gain some significant advantages in terms of pricing, liquidity and ease of investment. Again, a detailed comparison can be found in the commodity fund comparison page.

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