PCQ: What Just Happened?

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.

Thanks for reading.

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