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PIMCO Global Investment Grade Credit Fund

01 July 2021

4 minute read

Investing in bonds is effectively lending your money to companies. And there is no guarantee that every company will be in a position to pay back their bonds in the future. So, it’s imperative to have a large team of analysts scrutinising the market to find the very best bonds to invest in. And PIMCO have one of the largest teams of research analysts in the market today.

Who's it for? All investors

When it comes to investing in bonds, it’s all about the quality, or lack of. Bonds are effectively a way for companies and governments to borrow money. And, just like lending money to an individual, each company is assessed as to how likely it is that they will pay the money back.

Large institutions exist around the world dedicated to carrying out this work, and they give grades (otherwise known as ratings) to individual bonds. Those that are perceived to be the very highest quality are called ‘investment grade’ bonds. Those assessed as having a lower chance of repaying their bonds are called ‘sub-investment grade’ bonds (also known, rather cruelly, as ‘junk bonds’).

Focus on the highest quality

As the name of the fund suggests, the PIMCO Global Investment Grade Credit Fund focuses on the higher quality end of the bond market – the investment grade bond market. However, there is no guarantee that a company will ever repay its bonds at maturity, even if they are rated investment grade.

Therefore, it’s important for fund managers to carry out their own research on every single bond they’re considering buying. This way, they can apply their own assumptions as to the quality of each company, and potentially take a different view to the market by applying their own rating. For this, you need to have a large and dedicated team of analysts, and PIMCO is one of the largest in the world.

Why is size so important?

Having a big team of analysts is one thing, but it’s what you do with that team that’s important. The large team at PIMCO has two significant advantages.

The first is that they can carry out their own research on companies, to make their own judgement on how likely it is that they will be able to repay their bonds. And this is where the investment opportunities arise, by realising that some companies are weaker than the market believes they are, or that some companies are potentially misunderstood and are potentially stronger than the market believes they are.

The second advantage of being one of the world’s largest bond investors is that they are able to use their scale and reputation to gain access to senior company management and those involved in the issuance of new bonds. This is a formidable advantage that PIMCO has in what is a crowded market.

There are other bond funds on the Barclays Funds List, in addition to the PIMCO Global Investment Grade Credit Fund. Some of these invest in different parts of the bond market and offer the potential for different yields and total returns. Find out more information on these funds.

Correct at time of publishing.

To diversify your investment, you may like to consider our own Barclays Ready-Made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified one-stop solution for investors. Ready-Made Investments are not the only funds that we offer and they won’t be appropriate for everyone.

Past performance of the fund and its manager are not a reliable indicator of their future performance.

We don’t offer personal investment advice so if you’re unsure you should seek that independently.

Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.

These are our current opinions but the future, as ever, is uncertain and outcomes may differ.

Plan & Invest is a service which creates and manages a personalised Investment Plan just for you. Whether your long-term goal is your child’s university education, retirement or just building a nest egg, all you have to do is tell us a bit about yourself and then, if your application is successful and you’re ready to invest, let our experts select and manage your investments (minimum investment is £5000).

Read the Assessment of Value report [PDF, 3.2MB] for funds run by Barclays.

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