Mutual fund reviews: Pioneer Mutual Funds
Boston is the birthplace of the mutual fund, and the Pioneer group of mutual funds is the third oldest mutual fund organization in the United States. For nearly 80 years, Pioneer and its Boston neighbor, the Putnam fund group, have been vying for the credit of being the first mutual fund to include ethical values in the stock selection criteria for their flagship funds. Both Pioneer Fund, an equity fund, and The George Putnam Fund of Boston, a “balanced” fund combining bonds and stocks, were forbidden to invest in companies that profited from the manufacture or sale of tobacco or alcohol. For Pioneer, that stipulation remains.
As 2009 began, Pioneer Investments managed assets for 47 open-end mutual funds, including domestic and international equity funds, taxable and tax-exempt bond funds and money market funds, all bearing the Pioneer name. They also offer asset allocation funds and closed-end funds.
Most mutual funds are “open-end” by definition. They are obliged by law to allow investors to put money in and draw it out on any day the U.S. markets are open. Pioneer funds are sold through brokers, so if you buy class A shares you pay a “front end” sales charge (also called a “load”), but the fund must buy your shares back from you on any day the markets are open at their net asset value at the end of business. There is a whole alphabet of other share classes worth an article all their own, but share classes are standard in the industry and not unique to Pioneer.
Meet the family
The advantage of owning a mutual fund that is part of a large “family” of funds is that each fund is linked to the other by an exchange privilege. If you want to shift from (for example) a conservative position to a more aggressive one, you can do so without paying a new sales charge. However, if your exchange results in a capital gain (if the net asset value of shares has gone up since you acquired them) you may be subject to capital gains taxes.
Pioneer’s equity group includes funds that focus on common stocks and other equity securities. Some pursue value (trying to buy low and sell high), while others look for companies expected to provide above-average earnings growth. Many funds make use of a particular strategy. Conservative funds may look for large companies with established reputations, while others look for younger, more aggressive firms. Pioneer also offers international equity funds, which have been especially popular recently as the economic growth rate in the United States lost its long-held lead on countries in emerging economies like China, Brazil and India.
The income group includes some specialized municipal bond funds, money market funds (including a cash reserves fund and a floating rate fund), global bond funds, and conservative bond funds that invest primarily in government bonds or bonds with shorter maturities.
Pioneer’s fund family is competitive with similar groups managed by other investment companies, in that it offers alternatives to suit most individual investors. But Pioneer also offers “allocation” funds that pursue a single objective using a mix of Pioneer funds—a fund of funds—allocated across different asset classes. For example, Pioneer Ibbotson Aggressive Allocation Fund seeks long-term growth of capital through funds that focus on U.S. and international equities, bond funds and money market funds. Allocations for this fund are actually determined by an outside company, Ibbotson, that regularly rebalances the mix of funds in the fund in an effort to maximize returns without exposing investors to undue risk.
Never forget that no fund’s performance is guaranteed. Mutual funds can lift you up or let you down. It is important to learn as much as you can about your investments before you chose them.
Commentaries and Perspectives
Even if you are not ready to make an investment, Pioneer’s web site, www.Pioneer.com, is well worth a look. Mutual funds are constantly changing, dropping and adding funds, outperforming one month and underperforming the next.
Each Pioneer fund on the web site has a commentary section that gives you an up-to-date look at each fund’s comparative performance results, its current investments and the manager’s market outlook. The site also includes “Pioneer Perspectives” that present individual fund manager’s views on broad market trends. For example, in the Perspectives section, you might find a thought-provoking piece from John Pollen, Head of Emerging Markets at Pioneer, on the decoupling of emerging equity markets. This topic is the subject of considerable debate among economists and other financial professionals.