MARC SEIDNER: In this environment of increasing volatility and a period where investors increasingly are going to have to deal with disruption, we do believe that more flexible, more dynamic strategies will deliver better results.
PIMCO’s dynamic bond strategy is a flexible bond strategy that seeks to deliver consistent, high, risk-adjusted returns with a keen focus on downside protection and risk management.
A portfolio that focuses on diversification, asks the simple question in a more challenging fixed-income marketplace.
“How can we deliver positive results for our clients?” Global bond yields are extraordinarily low. Credit spreads are very narrow, and in navigating a more uncertain environment, we do use the breadth and depth of PIMCO’s portfolio managers around the world looking for areas of opportunity and ideas that seem out of favor, out of focus, and building off of that flexibility that is embedded in the portfolio construction process and is part of the hallmark to the PIMCO dynamic bond strategy.
The strategy falls into a non-traditional category.
Some call those portfolios unconstrained.
There should be nothing unpredictable about PIMCO’s dynamic bond strategy.
In attempting to manage the portfolio with a high degree of predictability, while delivering good risk-adjusted returns, there should be a combination of a little bit of duration in the portfolio.
And that combination of a little bit of duration, with a little bit of credit risk, tends to deliver good results across a number of different scenarios.
Put simply, as we enter a phase of markets where investors can benefit from dealing with disruption, having a little bit of flexibility, having something more dynamic in their portfolio that can capitalize on dislocation, will be key to success in the period to come.
Recorded 29 May 2019
Past performance is not a guarantee or a reliable indicator of future results.
A word about risk:Absolute return portfolios may not fully participate in strong positive market rallies. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets.
Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee there is no assurance that private guarantors will meet their obligations. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. Diversification does not ensure against loss.
There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision.
This material contains the opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
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