Recently, many financial advisors in Singapore have been actively promoting the PIMCO GIS Income Fund, especially through investment-linked policies (ILPs). It’s often advertised as a fund that pays over 6% in dividends, making it sound like a safe and attractive choice. But before you invest, it’s important to ask: Do you really understand how the fund works, and what the risks are?
This fund is offered by insurers like HSBC Life (Singapore) and Etiqa Insurance Singapore amongst others as one of the fund choices within their ILPs. The fund itself is managed and advised by global bond investment giant PIMCO.
About PIMCO GIS Income Fund
The PIMCO GIS Income Fund is a bond fund designed to give investors regular income. It also aims to grow your money over the long term. The fund spreads its investments across many types of bonds to lower risk and find good opportunities. These include:
- U.S. government bonds and home loan-related bonds
- Company bonds, from both strong and higher-risk companies
- Loans made by banks
- Bonds from developing countries
- Bonds backed by assets like car loans or credit card payments
This mix helps the fund earn steady income while also trying to increase in value over time.
How the Fund Tries to Keep Payouts Stable
The fund wants to provide a steady monthly income. It checks its payout levels regularly and may adjust them if market conditions change. For example, in 2022, the fund increased its payouts when bond yields rose.
It tries to reduce risk by investing in many types of bonds and keeping the credit quality high. In January 2025, the average credit rating was AA-. The fund follows a method that aims to stay strong even during market ups and downs. But again, in early 2025, only 55 to 65% of payouts came from income. The rest came from the fund’s capital, which may lower its long-term value.
Important Risks to Know
This fund is not guaranteed. You may lose money if the value of the bonds falls.
- If interest rates go up, the value of bonds may go down.
- Some of the bonds in the fund are lower-rated or from emerging markets, which are riskier.
- Some assets may be hard to sell quickly, especially during market stress.
- Part of the payout may come from your own capital, not just bond income.
- The fund invests globally, so currency changes may affect your returns.
- It also uses complex financial products, which carry more risk.
- The annual fee is around 1.45% (This is significantly higher than most passive bond ETFs and some other actively managed funds.), which reduces your returns.
What Happens If You Did Not Fully Understand the Fund
If this fund was recommended to you without a clear explanation, you might face some problems:
- You may not know that your capital is at risk.
- You might think the income is guaranteed, but it is not.
- You may not realise that part of your payout can come from your capital.
- You may not understand the risks, such as interest rate changes, defaults, or complex products.
- You may not be prepared for the ups and downs in the value of your investment.
- You may not know that the fees can reduce your returns.
The PIMCO GIS Income Fund is a professionally managed bond fund that gives you access to a wide range of bonds from around the world. It aims to provide higher monthly income by investing in many types of bonds, including some that carry more risk.
Because of this strategy, the fund can offer attractive returns but it also comes with higher risks and fees compared to simpler, passive bond funds.
Keep in mind that the income you receive may sometimes include part of your original investment (capital), not just profits. This can slowly reduce the value of your investment over time.
Before you invest, make sure you understand how the fund works and whether it matches your financial goals.
Disclaimer
Every effort has been made to ensure the accuracy of the information provided, but no liability will be accepted for any loss or inconvenience caused by errors or omissions. The information and opinions presented are offered in good faith and based on sources considered reliable; however, no guarantees are made regarding their accuracy, completeness, or correctness. The author and publisher bear no responsibility for any losses or expenses arising from investment decisions made by the reader.
