Gyroscopic Investing

Hi, everyone.  Newbie, here.  Reading this board with great interest.  Impressed with the wonky discussions.  I've learned a lot.

Right now own PRPFX (to which I must add EDV, I've learned) and read the other day of Pimco's new fund -

http://www.pimco.com/EN/Insights/Pages/ ... -Risk.aspx

and wondered what you all thought about it - ignoring the load and other expenses.  Sounds very much like PRPFX but without the equities.  Manager has a Ph.D. in theoretical physics - a real brainiac. 

Stay away from the fund.

1.  Front load 5.5% with an expense ratio of 1.25%

2.  Is designed to respond only to inflation.  There are parts of the interview that made me laugh out loud.  One was when the fund manager was asked about the possibilty of deflation and he said, "That's a fair question..."  Reminded me of the Saturday Night Live skit where Martin Short plays a seedy corporate executive who answers questions with that response while he sweats and nervously smokes cigarettes. 

3.  It uses "tactical" allocation methods (read attempts to market time) and is run by someone who probably was/is a quant.  One of the most dangerous things you can do in investing is to treat investment decisions like physics problems.

Welcome to the forum!

Ariadne22 wrote: Hi, everyone.  Newbie, here.  Reading this board with great interest.  Impressed with the wonky discussions.  I've learned a lot.

Right now own PRPFX (to which I must add EDV, I've learned) and read the other day of Pimco's new fund -

http://www.pimco.com/EN/Insights/Pages/ ... -Risk.aspx

and wondered what you all thought about it - ignoring the load and other expenses.  Sounds very much like PRPFX but without the equities.  Manager has a Ph.D. in theoretical physics - a real brainiac.   

Haha - thanks for the welcome and your comments.  I do like this forum.  The load and other expenses, of course, make no sense for me.  I will follow this fund with interest, however. 

Does the fund manager have an exotic sounding European accent?

That sort of thing normally helps establish credibility.

I love the bit where he says that the deflation inquiry is a fair question.  Any time someone tells me that I have asked a fair question, I want to tell them: "ALL of my questions are going to be fair, there is no need to screen them for fairness."

Beware of quants bearing gifts.

Especially accompanied by high sales charges and expense ratios.

Hi Ariadne22
Good rule of thumb, limit your exposure (or just plain avoid) managed mutual funds.  I have seen a (very) few exceptions over the years.  But not many.  And then only for certain specific situations where indexing is not practical or an available alternative.  They almost always under-perform their respective index over the long term and they charge steep fees which hugely detract from your cumulative returns.  You also tend to get hit hard on taxes.  See pretty much any book written by Jack Bogle or just read "The Bogleheads Guide to Investing" for an explanation of the downsides to managed funds.