PIMCO is adding two new funds that invest in Treasury Inflation Indexed Securities (TIPS), said John Brynjolfsson, a portfolio manager with the company.
The new funds, which include the Real Return II Fund and the Real Asset Fund, will round out PIMCOs offering of TIPS-based funds, he said. Currently, the only other fund the company offers that invests using TIPS is the Real Return II Fund, which invests in intermediate-term bond fund, according to Morningstar. That fund has $1.6 billion in assets under management.
The new funds will provide a conservative and more aggressive investment style, said Brynjolfsson. The Real Return II Fund will invest in more conservative short-term bonds with high quality ratings while the Real Asset Fund will invest in more aggressive bonds including foreign bonds and long-term bonds, he said.
TIPS are designed to hedge against inflation by offering a guaranteed rate of return over long periods of time. TIPS were first offered by the U.S. Treasury in 1997 and now total about $140 billion, of which PIMCO holds $3 billion, according to the company.
The funds will be offered to institutional investors for a minimum investment of $5 million, Brynjofsson said. The funds will be marketed to retirement programs and large institutions that prefer funds to a separate account investment format, he said.