A few weeks ago I wrote about the potential opportunities with alternative investments. I offered my best ideas to those who would email me, and because many of you did, I thought I'd follow up and present some alternative investments which I believe merit consideration.
Before disclosing my choices, please understand that I have no axe to grind, no dog in the hunt, and that every fund mentioned is based on objective analysis. Here's a few on my list.
PIMCO Global Multi Asset Fund
There are three managers on PGAIX, which was established in October 2008. One of the managers is Mohammed El-Erian, the former portfolio manager of the Harvard endowment. This fund is essentially 60% MSCI and 40% AGG and uses multiple tail risk hedging strategies to minimize downside risk.
PIMCO All Asset All Authority Fund
This fund, PAUIX, is managed by Rob Arnott, a long time favorite of the investment community. With a target return of CPI plus 6.50%, the expectation is that investors will receive a positive "real return" over time. This fund contains less risk than the Global Multi Asset fund and was established in October 2003.
PIMCO Unconstrained Bond Fund
This may well be the only fund of its kind. Morningstar classifies PFIUX as a Multi-Sector Bond fund, but in reality, Morningstar doesn't have an appropriate category for this type of fund. The target return is LIBOR plus 3.50%. Established in June of 2008, the unique aspect of this fund is that its duration can range from negative three years to positive eight years. Therefore, when interest rates do begin their ascent, with a negative duration, it should provide a positive return.
Franklin Templeton Hard Currency Fund
This fund, ICPHX, invests in high quality, short-term money market instruments and forward currency contracts denominated in foreign currencies and markets that historically have had low inflation rates. It was established in 1989.
This fund, MERFX, seeks capital growth by investing the bulk of its assets in companies involved in pending mergers, takeovers and other corporate reorganizations. For most of its investments, the fund's potential profit is equal to the difference between the price at which it acquires the target company's shares and their expected value upon completion of the transaction. Takeover stocks normally trade at a discount to the deal price because of the time value of money and the risk that the transaction won’t be consummated on its original terms or at all. The size of this discount, known as the arbitrage "spread," is influenced both by general market conditions and by deal-specific considerations that affect the transaction's timing and perceived probability of success. It was also established in 1989.
In the near term, I will discuss more alternative choices.
Thanks for reading!