Pimco's new closed-end fund raises $1 billion

Pimco's new closed-end fund raises $1 billion
Forget Facebook, Pimco just completed the largest closed-end-fund IPO in two years with the $1 billion Dynamic Income Fund
JUN 14, 2012
Bill Gross can teach Mark Zuckerberg a thing or two about initial public offerings. Mr. Gross' Pimco just completed the largest closed-end-fund IPO in two years. The Pimco Dynamic Income Fund (PDI) raised $1 billion during its IPO last week, the most since Tortoise Capital Advisors LLC raised $1 billion for its Tortoise MLP Fund (NTG) in July 2010. “There's a clear demand for income from advisers,” said Jonathan Short, head of Pacific Investment Management Co. LLC's global wealth management segment. The Pimco Dynamic Income Fund will invest at least 25% of its assets in non-agency-backed mortgages and will invest across multiple fixed-income asset classes, such as commercial-mortgage-backed securities and global high-yield bonds. Since it is a closed-end fund with a fixed number of shares that trade daily on an exchange, there is the possibility that shares can trade at a discount to net asset value. However, after a week of trading the shares are at a 7% premium. Premiums are fairly uncommon among closed-end funds, but Pimco's closed-end funds generally have been an exception. Pimco has the two closed-end funds with the largest premiums, the Pimco Global StocksPlus & Income Fund (PGP) and the Pimco High Income Fund (PHK), which trade at 86% and 71% premiums, respectively.

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