Pilgrim Management Corp. today will begin selling a bond fund featuring Mexican and Argentine government and corporate securities along with U.S. debt.
The Pilgrim All-Americas Government Income Trust is targeted toward banks, said Jim Ash. president of the Los Angeles-based company's Pilgrim Distributors Corp.
The fund will invest at least half its assets in U.S. government securities, initially with maturities of about six years.
Mexican government securities of about two years' maturity - currently yielding 14% - will make up another quarter of the fund. with Argentine government securities making up about 10%. The rest of the fund will consist of investment-grade corporate debt instruments.
Shooting for Income
"The fund will go for a high level of income that's going to be consistent with reasonable investment risk," Mr. Ash said.
He said the fund is likely to sell well through Pilgrim's bank network, because depositors are still looking for higher returns on their money.
"This is going to be great for the bank market. We are especially excited about the sub-adviser for the Mexican portfolio." Mr. Ash said.
Banamex, Mexico's largest bank and securities broker, will manage the Mexican portion of the fund.
The fund will offer three classes of shares:
* An "A" class with an initial load of 3.5%.
* "B" shares with a 3.5% backend load if redeemed within four years.
* A "C" class with a minimum investment of $50,000 and a 1.5% sales charge if sold within a year but no charge if sold thereafter.
Pilgrim, with $2.9 billion of assets spread across seven funds, is known for its niche investments, such as collateralized mortgage obligation funds.
"It's just a way for us to tap the Latin America growth market," Mr. Ash said.
Faith in Mexico
"With these higher yields, there's definitely more risk associated with these things," he said. "But we believe ... Mexico will be a success" with or without the North American Free Trade Agreement.
The fund will not invest in Canadian government securities. Mr. Ash cited low yields on that debt.
Pilgrim's other funds are Adjustable Rate U.S. Government; Corporate Utilities; GNMA Fund; High Yield Trust; Magnacap: and Short-term Multi Market, an international bond fund.