Should You Invest in the PIMCO Total Return Fund

The policy rate is the key going forward,said PIMCO founder and co-CIO Bill Gross,the "Bond King."We at PIMCO think it's gonna stay low for a long,long time.We think that unemployment of 6.5% is their target.We think the policy rate is the key, and has to stay down there to anchor and keep other rates low.*
Every week that we keep the government shut down subtracts 0.10% from GDP.Ultimately,the possibility of default is a million to one.The uncertainty going forward is not good for the Treasury rate.Every month,the Treasury brings in 300 billion dollars,and pays out 45 billion.It wouldn't even think about defaulting.*
The Total Return Fund suffered rather significant outflows,but September was a magical month,and investors are coming back.*
As for overseas investing,Brazil has particular problems in terms of its infrastructure and pension payments.It's not the paradise many investors had thought,Bill Gross observed.*
Despite outflows for five consecutive months,PIMCO's Total Return Fund is regarded as a core bond holding by many.It is the world's largest mutual fund.It saw 5.4 billion dollars of outflows in September,and 28.7 billion of outflows year to date.That's -10.1% of assets under management.This decline in popularity is pegged to a Wall Street notion that the Federal Reserve will soon begin hiking rates-a belief that hasn't been supported by the continuing slow pace of the recovery from the financial crisis and the drag of fiscal uncertainty.
The fund closed at 10.82 a share on Monday,down 0.09%.Nonetheless,Morningstar Associates gives it an outstanding five star rating.The fund has very low expenses of 0.46%,and bonds are still considered an essential element of a balanced portfolio.Over the long term,you are better off having significant exposure to the bond market.Among bond mutual funds,Total Return remains the clear favourite.*
PIMCO Total Return Fund(PTTRX),PIMCO Total Return ETF(BOND)

Should You Buy Homes Now

Now is the time to buy homes,said Mark Kiesel,manager of a PIMCO Investment Grade Corporate Bond Fund.There's a lot of pent-up demand for housing because rental prices are going up.A lot of the inventories are older.
Invest in building materials companies as well as construction.Timberland owner Weyerhaeuser gets 75% of its income from housing.Consider USG Corp. and Masco Corp.USG provides construction materials such as Sheetrock and Durock,while Masco offers building supplies,construction materials and contractor services.
Whirlpool gets 62% of its income from replacement,so remodeling benefits them.
Get into the emerging markets.We like to invest in 2-3 times the overall growth rate in fields such as gaming;gas distribution in China;and emerging markets banks.Brazil and Peru will see a lot of emerging markets growth.
Mr.Kiesel has an MBA from the University of Chicago Graduate School of Business.He is Morningstar's 2012 Fixed Income Manager of the Year.
Weyerhaeuser(WY),USG Corp.(USG),Masco Corp.(MAS),Whirlpool(WHR),PIMCO Investment Grade Corporate Bond Fund Instl(PIGIX)

Focus on Pharma:Drugmaker Looks To Pipeline,Divestitures

In its recent earnings report,Pfizer,the world's largest pharmaceutical company,posted 6% profit growth on cost-cutting and share buybacks.Sales declined 5% on patent expirations of cholesterol drug Lipitor and others taking effect.
Despite the loss of patent protection,Pfizer isn't giving up promoting its cardiovascular blockbuster.Lipitor is still being marketed with a 4 dollar copay card and television advertising.Sales of the drug dropped 40% in Q4 when its patent expired.The company says it hasn't yet decided whether the ad campaign will continue long term.Liptior was advertised on television more than any other prescription drug last year.
Pfizer has promising new drugs in its pipeline,such as lung cancer treatment Xalkori,rheumatoid arthritis drug tofacitinib,and atrial fibrillation medicine Eliquis.
Eliquis was granted priority review by the Food and Drug Administration.Morninstar Associates projects an 80% chance of approval for the medicine,with a potential for 3 billion dollars in sales.Profits from it would be shared with Bristol-Myers Squibb.
Pfizer continues its aggressive cost-cutting,and is well on the way to its goal of 4 billion dollars annually.The company is expected to finalize the divestiture of its animal health and nutritional segments later in 2012.Morningstar values these businesses at 11 and 7 billion dollars,respectively,says Damien Conover,CFA,Associate Director at Morningstar.
Pfizer(PFE),Bristol-Myers Squibb(BMY)

Morningstar's Wide Moats

Paul Larson,equity strategist at Morningstar,says the economy and its indicators are less bad.There's a big difference between less bad and good.We've been having simply a multiple expansion rally-just a rebound.It was not reflecting a meaningful recovery.There is not a whole lot of substance to the green shoots theory.
Morningstar likes companies with wide moats.Their profits are protected from competitors over the long term.Procter and Gamble is one of these.A third of its sales are in the emerging markets.Novartis is another wide moat firm.It is very diverse,being big in vaccines,generic drugs and consumer products.Lowe's is a third wide moat company.It's had negative same-store sales recently,but is very,very cheap right now,Mr.Larson notes.

Good Yields

The Claymore Zacks Yield fund(CLM) yields 5.98%,while the First Trust Morningstar Dividend fund(FDL) yields 5.84%.