The PIMCO Income Strategy can satisfy the demands of income-oriented investors who want to invest in a diversified multi-sector fixed-income portfolio. The strategy combines the PIMCO total-return active management style with techniques that seek to maximize distributable income.
PIMCO has been actively managing fixed-income portfolios for more than 35 years and is recognized widely as one of the world’s premier bond managers. The firm was at the forefront of investing in sectors such as mortgage-backed securities and emerging-market bonds, and has extensive dedicated resources in virtually every global fixed-income sector. In addition, PIMCO manages a number of income-oriented bond strategies that feature investment objectives similar to those of PIMCO Income Strategy. PIMCO is recognized as a leading institutional money manager with a significant balance of its assets under management in core bond portfolios that utilize multiple sources of additional value with a focus on risk management. Though the PIMCO Income Strategy utilizes this time-tested total return approach, the strategy focuses on income first and capital appreciation second.The strategy employs many of the same investment strategies used in other PIMCO strategies, such as the Total Return Strategy, and reflects the macroeconomic and asset-allocation views of the PIMCO investment committee. However, the Income Strategy also uses unique investment strategies in an effort to maximize income.
Managed to pursue efficient income generation, the Income Strategy also focuses on PIMCO total-return ideas in an effort to maximize capital appreciation and risk-adjusted returns relative to its peers. Although the strategy has an income orientation that produces sector allocations that may be slightly more concentrated than the Total Return Strategy, the Income Strategy reflects the central asset-allocation views of the PIMCO investment committee.
The strategy capitalizes on PIMCO strengths:
Because the strategy’s multi-sector approach gives it the flexibility to adapt to changing economic conditions, it may be well suited for a long-term income allocation and should be considered a complement to an investor’s core bond holdings.
Consistent with the PIMCO process and philosophy used for more than 35 years across all our strategies, the Income Strategy is founded on the principle of diversification. It is a multi-sector strategy, in which no single sector or strategy should dominate. By relying on multiple sources of value that arise from a diversified portfolio, we seek to generate a solid, consistent track record. This process utilizes both “top-down” and “bottom-up” strategies.Top-down strategies focus on duration, yield-curve positioning, volatility, and sector rotation with the potential to maximize current income. They are deployed from a macro view of the portfolio driven by our secular outlook of the forces likely to influence the economy and financial markets over the next three to five years and our cyclical views of two- to four-quarter trends. We implement it within Income Strategy portfolios by selecting securities that achieve the designated objectives. Bottom-up strategies drive our security-selection process and help identify and analyze undervalued securities and securities that pay high income. Here, we employ advanced proprietary analytics and expertise in all major fixed-income sectors. By combining perspectives from both the portfolio and security levels, we attempt to add value consistently over time within acceptable levels of portfolio risk.
PIMCO portfolio managers work as a team. Generalist portfolio managers receive input from specialists in each market sector. Sector specialists relay information, ideas and trading strategies, and assist with trade execution. PIMCO seeks to generate high, consistent income and add value while maintaining overall risk characteristics similar to the benchmark index. These techniques seek to produce a record of high, consistent income and above-market returns:
Risk management has been a major emphasis at PIMCO since our inception in 1971. As new technologies and financial instruments develop, we strive to ensure that our risk management procedures remain effective and that we stay ahead of our competition. We dedicate significant financial and intellectual resources to address risk management. Risk manifests itself in two main forms – investment and operational. Effective investment-risk management begins by identifying client objectives and the level of risk aversion. From there, we develop a set of appropriate investment guidelines and effective risk measures. Advanced proprietary analytics allow us to model securities under a multitude of scenarios including best and worst cases. We believe the decision to hold a security is just as important as the decision to buy. As a result, we price and re-evaluate portfolio holdings on a regular basis. Operational risk is equally important. Operational risk deals with problems or errors that may arise during day-to-day operations of the firm. Because we segregate responsibilities for portfolio management, account management, and investment support, and an independent compliance group monitors investment activity, our organizational structure is designed to address this risk. At PIMCO, we have embraced this methodology from our inception and it has benefited both our clients and the organization as a whole. Our system has clearly defined checks and balances to provide reasonable assurance that all risk exposures are handled in an appropriate manner.
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All material contained on the Exchange-Traded Funds section of this website is purely for informational purposes only and is not intended as investment advice. Investors should seek financial advice before making any investment decisions.
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