- To beat low rates and rising inflation, investors have never had as aggressive risk allocations as they do today.
- This frothy risk-taking environment has fueled immense popularity for high-yield funds like PIMCO Dynamic Income Fund.
- Overall yields and spreads for critical segments in PDI are rising rapidly, giving an initial warning signal of a global credit crunch.
- A continued rise in rates for risk assets would directly lower PDI's net asset value and increase interest expense costs - squeezing fund owners from both sides.
- PDI is still trading at a slight premium to its NAV, though it is falling fast, which implies a significant decline in investor interest in the fund.
For further details see:
PDI: Credit Hemorrhaging Is Accelerating Into A 'Global Credit Crunch'