Over the past decade, international investment has accelerated at a quick speed leading to shift in this investment which has resulted in the reshaping of the global economy. The stocks of international investment have almost tripled over the past decade both in developing and developed economies in the world. Investment has become important in relations to delivering goods and services to the global market. Investing internationally has been vital over the past decade in restoring the world economic growth.
America has played a very significant role in investment worldwide. It has over the past decade invested heavily throughout the world economy in various sectors. American investors have increased their stakes in investing internationally over the years. Despite the global economic meltdown, American investors still indulge themselves with investing in foreign market but at a slower pace. According to fDi report, American investment internationally reduced by 15.71% in 2012. There was also a 34.51% decline in capital investment from American investors and roughly a 32.84% reduction in jobs created as a result of American investors investing worldwide (fDi, 2013). American investments abroad were valued to be around $21,618.6 in 2012 (US Department of Commerce, 2013).
American investors usually invest in countries like Canada, Japan, Switzerland, Bermuda, British overseas territories, Caribbean and European countries. Europe has the largest share of international investment by American investors with about 45.8% share of the total investment.
It is worth noting that the distressingly and persistent large balance of payment faced by the United State during the past decade have raised eyebrows in the overall impact of foreign investment made by American investors on the US balance of payment. The main balance of payment flows in relation to foreign investments can be divided into two main blocks, namely: (1) those that affect the capital accounts and related service accounts which is the principal investment income, these are referred to as the financial flows, and (2) those which relates to merchandise trade account.
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The impact of United States foreign investment flows on merchandise trade account must be considered to be very delicate for various reasons. Firstly, data available on investment in relation to trade flows are very limited. Also, to assess the influence of foreign investment on trade flows, it is ideal to do a comparison between trade that took place in the absence of foreign affiliates and trade that took place in the presence of foreign affiliates. The real impact of investment flows on United States balance of payment hinges on the relationship between related financial flows and capital account.
PIMCO Total Return Fund INSTL (PTTRX) is the largest international mutual fund in the world. It main objective is to maximize total return and ensure a consistent conservation of capital and prudent management of investment. PTTRX’s primary portfolio includes intermediate term and investment grade bonds. It principal investment strategy seeks to achieve its objective by investing circumstances deemed to be normal, of at least 65% of its total assets in a portfolio with diversified maturities of fixed income instruments, which can be represented by derivatives or forwards such as future contracts, swap agreements or options. The fixed income instruments consist of debt securities, bonds and other similar instruments (PIMCO, 2013). Unlike other mutual funds which hew to specific sectors, PTTRX invest across various sectors and regions which enable it to seek risk adjusted returns which are very attractive.
PIMCO Total Return Fund has set a benchmark which is quality to none. Since its launch, it has focused on maximizing total return while protecting it principal. It quality, diversification and flexibility have set it apart from the rest. It emphasizes on higher quality and intermediate bonds which aims to evade concentrated risk exposure. It flexibility enables the fund to adjust to constant changes in the global economy in order to increase total return potential and manage overall risk. PIMCO’s total return approach stands unique as it will not sacrifice it principal by reaching for highest yields.
PIMCO Total Return Fund represents a sound investment. It is amazing that a fund like PIMCO with assets over one quarter of trillion dollars can find ways to beat the market consistently. The mutual fund has outperformed the fund of the average core bond making it short performance to be good. In terms of long term performance, it has been excellent as it has over performed the average core bond fund within the last 5 to 10 years. It risk level relative to returns has also been good while taking on reasonable amount of risk in relations to the volatility of its returns. It has an identical risk level to most core bond funds incase interest rate increases. It has in it stocks certain future contracts which are barely rated but are safe from default risk.
As an investor, I will invest in the PIMCO Total Return Fund as it presents the best option for me in accessing top investment. This is because it has smooth calls on the movement of interest rates and bond sectors with a total return of about 8.3%.
- fDi Report (2013). Global Investment Trends. The Financial Times.
- US Department of Commerce, (2013). US Net International Investment Position. Retrieved from official website:
- PIMCO, (2013). PIMCO Total Return Fund.
Retrieved from: https://investments.pimco.com/MarketingPrograms/External%20Documents/PIMCO_Total_Return_Brochure_PB4005.pdf
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