The PIMCO California Municipal Income Fund (PCQ) hugely underperformed the other muni PIMCO CEFs today and the rest of the sector (which rose 0.3%). The following chart is taken from our CEF Tool and shows the huge disparity across PIMCO CEFs.
This drop happened on huge volume for the fund.
What’s going on?
A big part of the reason is that PCQ continues to trade at a huge premium – way in excess of the other PIMCO muni CEFs.
The fund’s current yield is higher than the other 2 California PIMCO Munis but its distribution coverage is much lower.
This means that an allocation to the fund, while tempting, continues to be a bad idea as any distribution cut is likely to be much larger for PCQ which would cause it to continue underperforming in price terms.
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