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Participant ○○○

Re: Pimix div cut??

@Gary1952 

Daily accrual, distributed monthly if I recall correctly.

If a fund continuously pays a higher dividend than the aggregate dividends of the underlying assets, what's the correcting mechanism? It gets baked into the NAV. That's not to suggest that NAV isn't also influenced by other factors, most obviously the pricing action of those individual underlying assets.

Here's a crude analogy <don't overthink this>. Let's say you have a retirement nest-egg invested exclusively in bond funds. For simplicity, lets say the bond funds dividends are your ONLY income. Let's call that monthly income $x. Let's also presume you have monthly expenses of $y. If your expenses of $y exceed your income of $x, you have a drag on your nest-egg valuation. However, I can't tell you definitively that your nest-egg valuation went down because it's possible that the net change in your bond funds worth went up enough to counter the monthly overspending.

Similarly, a bond fund which pays a dividend that exceeds the aggregate dividend produced by its underlying assets will have a downward pressure, i.e., a contributing negative factor, on its NAV. Whether or not that sufficiently negates all upward price movement of the same underlying assets over a time period (a day, a week, a month, etc.) isn't easily discernible by us (the investors). For clarity, excessive dividend distribution does not ensure the NAV will trend negative, but when you are doing the accounting, it's on the negative side of the ledger!

If it's still unclear, I am outta ammo. Sorry.

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Contributor ○○○

Re: Pimix div cut??

PIMIX has a current 421% turnover. Do you suppose there are some gains made in those trades? Possibly some losses as well but adept managers most likely are on the plus side on average. Also their use of derivatives to juice yields may have stopped or been reduced. The fund yield does not put downward pressure on the NAV. Only underlying assets do.


@VA-Tech wrote:

@Gary1952 

Daily accrual, distributed monthly if I recall correctly.

If a fund continuously pays a higher dividend than the aggregate dividends of the underlying assets, what's the correcting mechanism? It gets baked into the NAV. That's not to suggest that NAV isn't also influenced by other factors, most obviously the pricing action of those individual underlying assets.

Here's a crude analogy <don't overthink this>. Let's say you have a retirement nest-egg invested exclusively in bond funds. For simplicity, lets say the bond funds dividends are your ONLY income. Let's call that monthly income $x. Let's also presume you have monthly expenses of $y. If your expenses of $y exceed your income of $x, you have a drag on your nest-egg valuation. However, I can't tell you definitively that your nest-egg valuation went down because it's possible that the net change in your bond funds worth went up enough to counter the monthly overspending.

Similarly, a bond fund which pays a dividend that exceeds the aggregate dividend produced by its underlying assets will have a downward pressure, i.e., a contributing negative factor, on its NAV. Whether or not that sufficiently negates all upward price movement of the same underlying assets over a time period (a day, a week, a month, etc.) isn't easily discernible by us (the investors). For clarity, excessive dividend distribution does not ensure the NAV will trend negative, but when you are doing the accounting, it's on the negative side of the ledger!

If it's still unclear, I am outta ammo. Sorry.


 

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Participant ○○○

Re: Pimix div cut??


@Gary1952 wrote:

PIMIX has a current 421% turnover. Do you suppose there are some gains made in those trades? Possibly some losses as well but adept managers most likely are on the plus side on average. Also their use of derivatives to juice yields may have stopped or been reduced. The fund yield does not put downward pressure on the NAV. Only underlying assets do.


@VA-Tech wrote:

@Gary1952 

Daily accrual, distributed monthly if I recall correctly.

If a fund continuously pays a higher dividend than the aggregate dividends of the underlying assets, what's the correcting mechanism? It gets baked into the NAV. That's not to suggest that NAV isn't also influenced by other factors, most obviously the pricing action of those individual underlying assets.

Here's a crude analogy <don't overthink this>. Let's say you have a retirement nest-egg invested exclusively in bond funds. For simplicity, lets say the bond funds dividends are your ONLY income. Let's call that monthly income $x. Let's also presume you have monthly expenses of $y. If your expenses of $y exceed your income of $x, you have a drag on your nest-egg valuation. However, I can't tell you definitively that your nest-egg valuation went down because it's possible that the net change in your bond funds worth went up enough to counter the monthly overspending.

Similarly, a bond fund which pays a dividend that exceeds the aggregate dividend produced by its underlying assets will have a downward pressure, i.e., a contributing negative factor, on its NAV. Whether or not that sufficiently negates all upward price movement of the same underlying assets over a time period (a day, a week, a month, etc.) isn't easily discernible by us (the investors). For clarity, excessive dividend distribution does not ensure the NAV will trend negative, but when you are doing the accounting, it's on the negative side of the ledger!

If it's still unclear, I am outta ammo. Sorry.


 


Your first 4 sentences are not really germane to my point. Your last 2 sentence are vague (perhaps deliberately). If a bond OEF distributes a dividend in excess of what is earned by the underlying assets, it will negatively impact the NAV. The bond OEF NAV is determined by the accounting methods which includes factors other than just the aggregate value of the underlying assets .... you can't just artificially can't create something from nothing.

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Frequent Contributor

Re: Pimix div cut??

According to the recent PIMIX annual report, there haven't been much CGs recently. The big CG about 3 yrs ago may have been "spent". Financial Highlights show portfolio generating about 4.5% income. Note that fund FY is not calendar yr.

YBB
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Contributor ○○○

Re: Pimix div cut??

Sure you can. Your last explanation did.


@VA-Tech wrote:

.... you can't just artificially can't create something from nothing.

 

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Participant ○○○

Re: Pimix div cut??

Not to put too fine a point on this:

The standard accounting convention is to calculate NAV at the end of each trading day, based on the closing prices of all securities held within the fund AND then correct for other activities performed by the fund which includes (among other things): (1) recording accrued interest on bonds and other similar fixed income securities, AND (2) tracking distributions made to shareholders. Note, (1) and (2) need not be equal. Excluding all "other activities" not accounted for by (1) or (2), when (1) exceeds (2), the NAV grows; when (2) exceeds (1), the NAV shrinks.

https://www.thebalancecareers.com/mutual-funds-accounting-1287283

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Participant ○○

Re: Pimix div cut??

Back in 2018, I held a lot of PONDX, enough to convert into PIMIX, but I got rid of most of it that summer/fall. I still have $12K in PONAX. Pays about $54/month, soon to drop to $40. I hadn't paid much attention to it.

The same money applied to BCOSX would pay $22, so if I wanted the distributions, not a good move, but I feel TR favors BCOSX, so I made the switch today.
 

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Contributor ○○○

Re: Pimix div cut??

LOL. OK, you win @VA-Tech . Since you believe the NAV needs to stabilize, I hope it does not stabilize down since the yield is dropping. The 5.3% PIMIX made the last 3 months, 4% of which was NAV gain, was while the yield was 5+% . I am glad I don't use your math.

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Participant ○

Re: Pimix div cut??


@VA-Tech wrote:

If a fund continuously pays a higher dividend than the aggregate dividends of the underlying assets, what's the correcting mechanism? It gets baked into the NAV. That's not to suggest that NAV isn't also influenced by other factors, most obviously the pricing action of those individual underlying assets..


The correcting mechanism is to reclassify previously paid dividends as return of capital. A return of capital distribution lowers the per share cost or basis of the shares in an account, but not below zero. As far as I can tell, PIMIX has never made a return of capital distribution. Those in charge of the fund likely want to avoid making a return of capital distribution.

Seeking to maintain a level dividend rate during a year is a feature of the fund. Apparently, before the start of a year the managers of the fund estimate a fixed monthly dividend rate that the fund should be able to maintain while conforming with IRS regulations. The estimate was not sufficiently accurate this year, and a correction was made during the year.

The only previous calendar years with a decrease in the dividend rate during the year were: 2008, when the dividend rate for December was 70% less than the usual rate, and 2018, when the dividend rate for September was 10% less than usual, but for August was 10% more than usual, with the average over August and September being the usual dividend rate.

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Participant ○○○

Re: Pimix div cut??

Hi @PatMorgan 

I've been told they also target the projected payout with enough conservatism that they can make a special December payout that is deemed flexible in magnitude and may or may not be paid.

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Participant ○○

Re: Pimix div cut??

A lot of people don't pay attention and will only notice when they look at their next distribution the first couple days of September or may not even notice until they look at their September statement.  The price could take a hit at that time. We shall see.

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Contributor ○○○

Re: Pimix div cut??

How many funds publish changes in yield? Not any I can think of. They generally just let the change happen. No big deal.

 

     @EnvEng wrote:

There seems to be some back-ground chatter that Pimix has cut the monthly div from $0.0555 to $0.40. Anybody know for sure?

TIA

Eng

 

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Explorer ○

Re: Pimix div cut??

Yes, most definitely it was cut.

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Frequent Contributor

Re: Pimix div cut??

@Gary1952  is correct. Mutual funds/OEFs don't publish advance info for dividends or CGs because they have to distribute most of those and the OEFs follow distribute-as-you-go policy.

Pimco Income has been a bit different in that it has tries to keep monthly distributions level, with the balance distributed as yearend special dividend. Even so, it was hard to find info about the distribution cut, but of course, people can now verify it after the fact.

ETFs and CEFs are different and declare dividends in advance as stocks do. Many CEFs also follow managed-distribution policy that may result in ROCs.

YBB
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Follower ○○○

Re: Pimix div cut??

@Gary1952 wrote: No big deal.  

Easy for you to say. In the month before the cut, I moved $44,000 into Pimix for fixed income as the rest of the market idles along. The div cut cost me $250/month that I need for living expenses. 

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Frequent Contributor

Re: Pimix div cut??


@EnvEng wrote:

@Gary1952 wrote: No big deal.  

Easy for you to say. In the month before the cut, I moved $44,000 into Pimix for fixed income as the rest of the market idles along. The div cut cost me $250/month that I need for living expenses. 


Here we go again, what counts is total return. 

PIMIX made about +1.5% in August including dist=0.04

PIMIX lost about -8% in March including HIGHER dist=0.0555

Which month do you prefer?

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Follower ○○○

Re: Pimix div cut??

FD, you are a trader, I am not. I invest for FI to cover living expenses. You may recall I asked you a while back about the stability of the Pimix dist and you said it is safe. I am not blaming you. It was my call. But that loss of $250/month hurt us as our medical expenses continue to rise. It is a big deal because of our needs and strategy to meet our needs. Such is life. 

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Contributor ○○○

Re: Pimix div cut??

My comment "no big deal" was not aimed at anyone in particular. My point was that Pimco happened to be the only company that would announce the decrease of yield. No other company does that.  Anyone investing in FI should understand that interest rates are very low and no one gets 5% yield risk-free. I would hope you can recover needed income thru "cash flow" from your other investments which is basically TR as FD1001 suggests  Christine BEnz had a good article recently on using cash flow as incime. Sorry for your suffering.

P.S. This is why retirees need some growth in their portfolios too.


@EnvEng wrote:

@Gary1952 wrote: No big deal.  

Easy for you to say. In the month before the cut, I moved $44,000 into Pimix for fixed income as the rest of the market idles along. The div cut cost me $250/month that I need for living expenses. 


 

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Frequent Contributor

Re: Pimix div cut??


@Gary1952 wrote:

My comment "no big deal" was not aimed at anyone in particular. My point was that Pimco happened to be the only company that would announce the decrease of yield. No other company does that.  Anyone investing in FI should understand that interest rates are very low and no one gets 5% yield risk-free. I would hope you can recover needed income thru "cash flow" from your other investments which is basically TR as FD1001 suggests  Christine BEnz had a good article recently on using cash flow as incime. Sorry for your suffering.


@EnvEng wrote:

@Gary1952 wrote: No big deal.  

Easy for you to say. In the month before the cut, I moved $44,000 into Pimix for fixed income as the rest of the market idles along. The div cut cost me $250/month that I need for living expenses. 


 


Keep an eye on how PIMIX does TR. I think it is going to bounce back. Already seems that way. It may never be the best FI choice out there again but it is always solid, IMO.

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Contributor ○○○

Re: Pimix div cut??

Been doing well for month. But I always felt it good, not as a trading tool though. Maybe not as good as before the cut (for those looking for the payout each month) but with a successful long track record it is worth a look. There are not many you could hold for 10 years and have the same principal left in your account after collecting a the full yield.


@rhythmmethod wrote:


Keep an eye on how PIMIX does TR. I think it is going to bounce back. Already seems that way. It may never be the best FI choice out there again but it is always solid, IMO.


 

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