In this article, we take a look at the updated leverage figures of the PIMCO taxable suite for September and what it means for investors. Our main takeaway is that the funds have continued to not only add borrowings but to increase fund leverage levels as well. In other words, the funds have added borrowings at a faster pace than the growth of their NAVs. This, along with low leverage costs, should allow them to maintain strong earning capacity.
However, from a tactical perspective, the funds are currently trading at an elevated premium valuation relative to the last few months. This has caused us to lower our exposure to the funds in our Income Portfolios. An earlier draft of this article expected the PIMCO Dynamic Income Fund (PDI) premium to rise back above that of the PIMCO Dynamic Credit Income Fund (PCI) post its share offering, however, this has already