The Pimco MuniGO Fund (APNDX) will invest in intermediate-maturity general obligation bonds from top-rated municipal issuers, as well as pre-refunded municipal bonds backed by U.S. Treasury and agency securities, the Newport Beach, Calif., firm said in the statement.
The fund will be managed by John Cummings, executive vice president at Pimco and head of the firm's municipal bond trading desk.
The minimum investment is $1,000 and the expense ratio is 0.75% through July 2010.
“The fund was created in response to demands for a high-credit quality portfolio and is something that might be an appealing substitute to those insured ladders that individuals use,” said Bob Fields, senior vice president and product manager for municipal bond products at Pimco.
Pimco had $756 billion in assets under management as of March 31.
But the fixed-income giant is not alone in the high-quality bond fund arena and there is at least one other fund with a similar strategy.
The $500 million Baird Intermediate Muni Bond fund (BMBIX), which was launched in 2001 by Baird Advisors, the fixed income asset management arm of Robert W. Baird & Co. Inc. of Milwaukee, invests in high-quality general obligation bonds and pre-refunded municipal bonds backed by Treasury or agency securities.
Baird has $14.4 billion in assets under management.
The Baird fund posted a return of 6.37% last year and beat all other 637 muni-bond funds in terms of performance, regardless of the category, reported Lawrence Jones, a fund analyst at Morningstar Inc. of Chicago.
Year-to-date through July 1, the fund is up 2.6%, according to Chicago's Morningstar Inc.
“It's an interesting approach to muni investing because it takes some of the credit risk off the table,” Mr. Jones said.
“It's a good option for conservative and cautious investors.”
The fund has a minimum investment of $2,500 and the expense ratio is 0.30%.
