PCRIX No March Dividend?

[BUM]

No March dividend for PCRIX? I've been slow to DCA into this fund since their anouncement regarding IRS compliance. Last I remember they have until June '06 to comply.

Anybody else feel funny about this?

 

[brewer12345]

Yeah, I didn't see one either. I note that the fund was down ~5% for the first quarter and December had a huge distribution, so maybe they didn't have taxable income to distribute. I'd imagine you could call them and ask if you are really curious.

FWIW, I think the IRS thing is a non-issue. I wish there were something cheaper than PCRIX, but its better than any of the alternatives currently available.

 

[riskadverse]

Can someone bring me up to speed on pcrix - what was the result of the IRS ruling? I'm having no luck searching. I currently do not own it, but with the recent drop may be interested.

 

[mikew]

I wish there were something cheaper than PCRIX, but its better than any of the alternatives currently available.

Isn't Ishares supposed to be coming out with a commodity ETF based on GSCI soon?

 

[brewer12345]

Pimco was using basket futures swaps collateralized with TIPS to replicate the DJ-AIG index.  The IRS told them that the derivatives they were using to replicate the index were not kosher per the tax code and therefore theey had to stop doing what they were doing or they would lose the special tax status that mutual funds have.  I believe Pimco appealed this stupid ruling.  In the meantime, they started rolling the portfolio over into structured notes, which is what QRAAX uses.  Structured notes are basically a bond issued by a trust that holds whatever it is you want exposure to (in this case, TIPS plus basket commodity swaps).  The bonds then pay interest equal to the return of the underlying investments.

Its a shell game and the switch to the notes doesn't change the economics except to add a bit more expense (like 10 BP).  Not a big deal, IMO, but I would love to find something cheaper.

 

[SC]

I wish there were something cheaper than PCRIX, but its better than any of the alternatives currently available.

Isn't Ishares supposed to be coming out with a commodity ETF based on GSCI soon?

Yes, both Barclays (Ishares) and Deutsche Bank have registered with the SEC to begin selling commodity ETFs.

According to this article:
http://www.fa-mag.com/news.php?id_content=4&idNews=341
the Ishares commodity ETF will have an expense ratio of 0.75%. PCRIX has an ER of 0.74%.

Seeing how Vanguard tends to lag in introducing new classes - they still have no international bond funds, for example - it might be a while before anything cheaper is available...

SC

 

[brewer12345]

Quote from the article on the Barclay's offering:

"Many consider the ETF to be an important portfolio-diversifying product. But, with more than 75% of its dollar weighting in some form or oil or gas, it's pretty safe to say it's a major energy play."

So its not going to be anywhere near as diversified as PCRIX.

 

[SC]

Good point. So not only is the Ishares ETF about the same price and has no track record, but it's more of an energy play than a general commodities fund. I've got plenty of energy exposure in my core index holdings, so it looks like PCRIX is still the commodities fund to use.

 

[ESRBob]

Yeah,
Imperfect, and throwing off far too much taxable income in recent years (the reason I had to recharacterize (undo) my Roth Conversion this year) but its the best we've got at this point for diversification into that asset class. Checked their website and quarterly statement, and there is no divvy on any of the PCRIX family. I say be grateful for small things -- the taxes on these distributions are no fun. I guess they got enough cleared out in December?

 

[BUM]

Thanks for the input. PCRIX did disgorge a big dividend in December. I like the diversified approach. A plain oil & gas play panders to those who fear prices at the pump. The index weightings Pimco uses are shown on the link below.

Time to top off the tanks....gas for the truck, coffee for me and unfortunately for PCRIX, no sugar.



http://www.pimco.com/LeftNav/Product+Focus/2006/Commodities_Approach_03_04.htm

 

[pms163]

Sorry for jumping into this so late...

For those that like ETFs, DBC may be a good choice. Tracks DBLCI, which is less heavily weighted toward energy than GSCI (which will tracked by the proposed iShares ETF).

For an intro, see http://www.capitallinkforum.com/cef/2006/pres/01_rich.pdf

 

[brewer12345]

Sorry for jumping into this so late...

For those that like ETFs, DBC may be a good choice.  Tracks DBLCI, which is less heavily weighted toward energy than GSCI (which will tracked by the proposed iShares ETF).

For an intro, see http://www.capitallinkforum.com/cef/2006/pres/01_rich.pdf

DBC is expensive and is over 50% energy, IIRC. Not real diversified, as it only holds 5 commodities as I recall. Still not the equal of PCRIX, IMO.

 

[pms163]

DBC

You're pretty much right. DBLCI uses 6 futures: light sweet crude 35%, heating oil 20%, gold 10%, aluminum 12.5%, corn 11.25% and wheat 11.25%. Supposedly these reflect actual market ratios (using two representative commodities from each major commodity sector).

The initial prospectus listed estimated expenses of 1.9%, but I read that they are now projecting 1.3%. And I expect the expense ratio to decrease once iShares competition comes into play! DBLCI should perhaps be less expensive to track than GSCI because the former uses only 6 heavily traded (liquid) commodities.

But we shall see...