Why RSMR Rate this Fund

• PIMCO is one of the world’s largest fixed income managers. This fund is a risk-controlled expression of its best ideas.

• PIMCO’s Portfolio Managers are usually very experienced and, in most cases, have spent many years at the group. Consistency is important and a key element of this is the retention of experienced and senior members of staff.

• The fund is very actively managed, asset allocations change to reflect economic and market conditions and to take advantage of opportunities as they arise.

Fund Process

PIMCO spends a huge amount of energy developing its central investment strategy and research capability, which is fed down across all its funds. The Global Advisory Board consisting of academics, ex-politicians and retired central bank committee members meet quarterly, once at a Secular Forum to discuss long term market impacts and three times at a Cyclical Forum to evaluate expectations over the next 6-12 months. The investment strategy combines top-down analysis of economies and markets with bottom-up research that considers individual issuers and securities.

Following the forums, PIMCO’s portfolio managers meet for a Strategy Week to discuss how the firm’s economic outlook will impact each sector and to identity the most attractive risk-adjusted investment opportunities. Based on these discussions, the Investment Committee sets targets across key risk factors (interest rate risk, credit risk, currency risk, etc.) for each investment strategy.

Asset allocation is benchmark agnostic, the fund invests wherever the strategy sees the best value and risk reward metrics, subject to a 50% limit in high yield. A member of the Risk Management Team works closely with the team offering insights on fund positioning and trades that might serve to improve performance and manage risk. The team works closely with sector specialists to determine the best way to gain exposure to specific sectors.

The fund will tend to track global fixed income markets, however due to its unconstrained investment policy it should be able to avoid sectors where the risk/reward balance is unfavourable and therefore, if you trust the process, should over the longer term be able to outperform. Liquidity within the fund is good, valued at more than £50bn, the fund can accommodate large inflows easily.

Evaluation

Conditions where growth, interest rates and inflation revert to trending around long terms, are likely to suit the fund best.

In conditions such as those witnessed in 2022, where interest rates rose significantly and inflation was high, it is likely to fall in value.

Application

The fund is well suited as a core holding in the global fixed income sector, due to its active style of management and focus on risk reward metrics. It pays a monthly dividend, which can be accrued in accumulation share classes.

Our Opinion

PIMCO is one of the world’s largest fixed income specialists. It has an impressive research and strategy resource and due to its size can gain access to all areas of the market. This fund represents the group’s best ideas and as such should be able to outperform in a variety of market conditions.