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PIMCO Income Strategy Fund II
PIMCO Income Strategy Fund II (PFN) launched in 2004 as one of Pacific Investment Management Company's listed closed-end funds.
PIMCO Income Strategy Fund II
PIMCO Income Strategy Fund II (PFN) launched in 2004 as one of Pacific Investment Management Company's listed closed-end funds. The fund operates under the umbrella of PIMCO, the Newport Beach-based fixed-income manager that oversees roughly $1.9 trillion in assets, but PFN's specific portfolio is run with a distinct mandate by portfolio manager Alfred Murata, who took the lead in 2013 after years as a senior member of PIMCO's mortgage and structured-credit teams. The fund's strategy targets current income by assembling a multi-sector credit portfolio. Holdings bifurcate between a floating-rate sleeve—typically bank loans and collateralized loan obligations—and a fixed-rate sleeve anchored in high-yield corporate bonds, emerging-market debt, and commercial mortgage-backed securities. PIMCO's global credit platform feeds the fund, and the portfolio commonly uses leverage to amplify yield, with total effective exposure often exceeding net assets by 30–40%. Geographically, the book spans North American and European developed markets with tactical allocations to select Asian credit, though the United States has historically constituted the majority of risk. The fund held approximately $670 million in total managed assets as of its most recent public filings, with the portfolio's day-to-day construction drawing on PIMCO's 100-plus credit analysts across Newport Beach, New York, London, and Singapore. Murata is supported by Group CIO Dan Ivascyn, who runs PIMCO's broader income strategies and directly influences the macro positioning of closed-end portfolios. In September 2023, the fund maintained its managed distribution policy at a level that translated to an annualized distribution rate well above investment-grade benchmarks, reflecting the structural yield advantage built into the closed-end structure (per the firm, September 2023). The closed-end vehicle structure is the fund's genuine differentiator in a world of daily-redemption open-end credit funds. Fixed capitalization lets Murata hold less-liquid loans and structured tranches through credit cycles without facing investor redemptions that force asset sales at bid-side pricing. That architecture—permanent capital wrapped inside one of the largest fixed-income shops—distinguishes the fund from virtually all interval funds and private credit BDCs that have launched since 2020.
General information
Firm type
Asset Manager
Year founded
2004
AUM
Undisclosed
Location
Region
North America
Country
United States
City
New York
Corporate office
New York, NY, United States
Principals
Alfred Murata
Portfolio Manager
Daniel Ivascyn
Group Chief Investment Officer
Sector focus
Frequently asked questions
Who runs investment decisions at PIMCO Income Strategy Fund II?
Alfred Murata serves as the named portfolio manager and has led the fund since 2013. He is a managing director and veteran of PIMCO's mortgage and structured-credit desks. Dan Ivascyn, PIMCO's group chief investment officer, provides macro-level oversight across the firm's income-oriented closed-end funds, and the fund benefits from the broader PIMCO investment committee's sector views.
How does the fund differ from an open-end high-yield bond mutual fund?
The fund trades as a closed-end fund on the New York Stock Exchange, meaning it has a fixed pool of capital rather than daily inflows and outflows. That structural difference allows the portfolio manager to hold less-liquid positions—such as bank loans, CLO tranches, and private structured credit—without needing to sell into a downturn to meet redemptions. The trade-off is that the share price can trade at a discount or premium to net asset value, introducing a layer of market risk not present in open-end funds.
What types of debt instruments does the fund hold?
The portfolio blends floating-rate assets and fixed-rate credit. Floating-rate positions typically include senior secured bank loans and collateralized loan obligations, which benefit from rising short-term rates. The fixed-rate bucket concentrates on high-yield corporate bonds, emerging-market sovereign and corporate debt, and commercial mortgage-backed securities. The fund also uses modest leverage, often through reverse repurchase agreements or credit-default swap overlays, to increase income generation.
What is the distribution policy, and is the yield sustainable?
The fund operates a managed distribution policy that targets a level monthly payout, set periodically by the board and management. As of its most recent declaration, the annualized distribution rate ran materially above what a standard high-yield index fund would deliver. Sustainability depends on net investment income covering the distribution; the fund has at times returned capital when income fell short, a common dynamic in closed-end credit vehicles that institutional allocators should monitor alongside total return on NAV.
How does PIMCO's credit platform support the fund?
PIMCO fields more than 100 credit research analysts globally, with dedicated teams for leveraged loans, structured products, emerging markets, and municipals. The fund taps that same research and trading infrastructure that supports PIMCO's flagship Total Return and Income strategies. The manager can also source private and directly negotiated credit investments through PIMCO's alternatives platform, though the fund's public filings show the bulk of holdings are syndicated loans and publicly traded bonds.
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