Alternative Investments

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Alternative Investment Strategies

Alternatives timeline

Alternatives timeline

PIMCO Alternative Credit & Private Strategies1,2

PIMCO is one of the largest credit investors in the world, with a distinct presence across the risk and liquidity spectrum in global credit markets.

We invest globally across corporate credit, commercial real estate debt, residential mortgages and specialty finance markets, with experience that spans lending platforms, direct origination, structured finance, leveraged finance, distressed credit and sub-performing credit.

We believe in taking a highly integrated investment approach, which leverages our macroeconomic process, robust experience managing flexible and opportunistic credit investing, global credit research team and deep analytics resources.

PIMCO’s alternative credit platform was built on flexibility and resilience. We believe that an opportunistic and risk-conscious approach to credit investing can allow investors to take advantage of opportunities across the credit spectrum, while maintaining sufficient flexibility to react to broad-based and sector-specific dislocations.

  • $23 billion in alternative credit & private strategies AUM
  • ~$100 billion deployed into private markets
  • 90+ dedicated alternative credit and private strategies portfolio management resources
  • 70+ portfolio analytics resources
  • 65+ credit research analysts

Commercial Real Estate

Since 2011, our real estate team has invested over $5 billion of capital across private debt and equity opportunities. This activity has spanned opportunistic and value add real estate private equity investments, control and non-control positions in real estate-related public equities, and a variety of debt instruments, including non-performing loans, senior lending, mezzanine lending and investments in CMBS across the capital structure. We have more than 30 real estate investment professionals across Newport Beach, New York, London and Munich that span a diverse range of specializations and backgrounds including originations, capital markets, real estate acquisitions and asset management.3

Our team is active across all four quadrants of global real estate markets – public debt, private debt, public equity and private equity. Our approach is differentiated in that we are highly integrated with PIMCO’s broader platform, allowing us to apply macro insights, analytics and credit research into our investment process, while also benefiting from the firm’s financing and sourcing channels.

Investment Capabilities

Commercial Real Estate (CRE) Debt

Our capabilities in CRE debt include senior transitional lending, mezzanine lending, legacy and post-crisis CMBS, sub-performing loans, agency multi-family debt and land/construction finance. We believe that our distinct presence across REIT debt, senior and subordinate CMBS, direct lending and CRE private equity provides potentially significant advantages.

Corporate Credit

Our corporate credit capabilities span leveraged loans, high yield bonds, bank capital, CLOs/CBOs, direct lending, capital solutions and distressed investing across developed and developing markets. We have played a leading role in several of the largest corporate restructuring efforts following the global financial crisis.

Residential Mortgage Debt

Our residential mortgage team is one of the largest providers of capital to the U.S. and European residential mortgage markets. Our activities span credit-sensitive RMBS, prepayment sensitive RMBS, new origination loans, legacy loans and direct origination platforms.

Specialty Finance

Our specialty finance team focuses on consumer and commercial specialty finance. Our consumer finance practice focuses on various forms of consumer lending, credit card receivables, student lending and auto lending. In commercial finance, we are active across trade finance, transportation finance, equipment finance, insurance finance and other esoteric lending opportunities.

Current Strategies

Our alternative credit platform provides investors with a variety of flexible and/or opportunistic credit solutions for both qualified retail and institutional investors across the risk, return and liquidity spectrum.

Semi-liquid Credit strategies

  • Relative Value
    • Global credit relative value strategy
  • Enhanced Liquid Credit
    • Liquid credit strategies seeking to enhance returns through prudent use of leverage on public credit assets
  • Tactical Opportunities
    • Directional, opportunistic credit strategy that seeks to capitalize on opportunities across global public and private credit markets while hedging a portion of credit beta

Private Performing Credit strategies

  • Private Income
    • Global, multi-sector private credit strategy spanning all key private credit verticals (corporate, CRE debt, residential mortgage and specialty finance)
  • Private Commercial Real Estate Debt
    • Senior commercial mortgage lending strategy targeting transitional commercial real estate debt in the United States

Opportunistic strategies

  • Bank Recapitalization and Value Opportunities
    • Opportunistic thematic multi-asset strategy with the flexibility to allocate across public and private, debt and equity markets
  • Corporate Opportunities
    • Opportunistic corporate strategy that focuses on capital solutions, stress/distress and idiosyncratic situations in public and private markets
  • Collateralized Loan Obligations (CLOs)
    • Flexible CLO strategy seeking to capitalize on relative value opportunities across the capital structure in CLO debt and equity

Registered Funds

PIMCO also manages registered funds, including PIMCO Flexible Credit Income Fund. For more information, please click here.

1 As of June 30, 2019

2 Certain PIMCO personnel who will provide investment advice to the strategies are separated by information barriers. As a result, certain communications may be subject to restrictions.

3 The past investment experience of PIMCO and its investment professionals is no guarantee of future results.

PIMCO Diversifying Absolute Return Strategies1,2

PIMCO’s Alternative Diversifying Absolute Return platform is informed by the firm’s robust macro, credit, commodities, derivatives and quantitative capabilities and has evolved since our flagship hedge fund strategy initially launched in 2004.

Our absolute return strategies are a natural outgrowth of our extensive experience pursuing alpha for our clients.3 The variety of opportunities offered through the platform focus on investor outcomes by targeting attractive returns, desirable Sharpe ratios, and potentially low or no correlation to traditional asset classes.

  • $16.1 billion in diversifying absolute return strategies AUM
  • 40+ dedicated portfolio managers
  • Seven strategy types relying on five areas of capability investing across all major public securities markets

Diversifying Absolute Return Strategies teams partner with and rely on PIMCO’s expertise:

  • 255+ portfolio managers
  • 65+ global credit research analysts
  • 75+ quantitative research analysts
  • $15 billion in commodity assets (index oriented and absolute return)
  • $46 billion invested in quant strategies (index oriented and absolute return)
  • 15+ years of dedicated quantitative strategy experience
  • 15+ years investing in (re)insurance securities

Investment Capabilities

Macroeconomic

Macroeconomic analysis has been a key input to PIMCO’s investment process over our 45+ year history. This is supported through long-established cyclical and secular economic forums, global and regional investment committees, as well as further insights from our Global Advisory Board of market and policy specialists. Our dedicated team of portfolio managers has a longstanding track record investing in macro/directional, relative value and tactical/systematic trades across asset classes in developed and emerging markets.

Credit

Our credit portfolio managers span the full spectrum of credit opportunities from investment grade corporate credit to subordinated structured credit to distressed emerging market credit. The team leverages PIMCO’s highly integrated credit platform and focuses on identifying distinct directional and relative value opportunities across the risk and liquidity spectrum to build strategies that are flexible, opportunistic and resilient.

Commodities

Our dedicated team of commodity portfolio managers, leveraging a broad set of resources including commodity analytics, risk management and credit research, manage one of the world’s largest absolute return commodity strategies. Our analysts focus on fundamental and structural drivers of return across a broad opportunity set in commodity markets.

Insurance-linked Securities

Our multi-disciplined team of experienced insurance specialists access and underwrite a diverse universe of customizable insurance-linked instruments. A strategic relationship with our parent company, Allianz, supports our sourcing and access to the resources and experience of one of the world’s largest and longest-tenured insurance platforms. Our insurance-linked securities capabilities emphasize diversification across underlying risk, region, and investment type, using sophisticated underwriting, portfolio construction, and structuring techniques to build resilient portfolios.

Systematic Trading & Derivatives

Our dedicated quant portfolio management team and 50+ person analytics group leverages broad quant strategy research and benefits from PIMCO’s extensive history employing risk premia strategies since the 1980s. Areas of focus cover interest rates, equities, and currencies across both developed and developing markets as well as commodities and the derivatives related to each of these markets.

Product Offerings

Discretionary Relative Value Absolute Return strategies:

  • Multi-strategy credit
  • Commodities
  • Volatility

Discretionary Directional Absolute Return strategies:

  • Global macro
  • Insurance-linked securities

Systematic Absolute Return:

  • Diversified, market-neutral alternative risk premia
  • Managed futures

1 As of June 30, 2019

2 Certain PIMCO personnel who will provide investment advice to the strategies are separated by information barriers. As a result, certain communications may be subject to restrictions.

3 The past investment experience of PIMCO and its investment professionals is no guarantee of future results.

Amidst the financial crisis, PIMCO expanded both its capabilities and offerings in direct mortgages, structured credit and real estate with the intent to capitalize on the evolving opportunity set, while emphasizing flexibility. A combination of bottom-up real estate underwriting with macroeconomic insights is used to determine optimal asset allocation. In addition, the strategies focused on uncovering embedded investment risks and value-add potential at the property level and incorporating a relative value framework that includes both public and private real estate data points.

PIMCO’s real estate team includes individuals with real estate private equity, structuring, servicing and origination expertise operating in both the U.S. and Europe. With private and public real estate markets more interconnected than ever, the team’s expertise in asset selection and structure provides a unique perspective to investing and creating value in real estate. Investments span originations, real estate equity, non-performing and re-performing loans, private debt and structured credit, underscoring the team’s flexibility.

PIMCO Mortgage and Real Estate Opportunistic Funds Timeline: Aiming to Capitalize on the Transformation in Real Estate Credit Markets


Real Estate timeline


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Disclosures

PIMCO provides services only to qualified institutions and investors. 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.


The following disclosures may not include all risks related to the strategies described herein. Additionally, this material is not intended to provide, and should not be relied on for, accounting, legal, tax or other advice. You should consult your advisors regarding such matters.


General risks: The strategies involve a high degree of risk and prospective investors are advised that these strategies are suitable only for persons of adequate financial means who have no need for liquidity with respect to their investment and who can bear the economic risk, including the possible complete loss, of their investment. All investments contain risk and may lose value. The strategies will not be subject to the same regulatory requirements as registered investment vehicles. The strategies may be leveraged and may engage in speculative investment practices that may increase the risk of investment loss. The strategies are not expected to track a particular benchmark. A strategy's fees and expenses may offset its trading profits. The portfolio manager(s) are expected to have broad trading authority over a particular strategy. The use of a single adviser applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. The strategies generally involve complex tax structures and there may be delays in distributing important tax information. A substantial portion of the trades executed for certain strategies may be in non-U.S. securities and take place on non-U.S. exchanges or non-U.S. jurisdictions. Certain strategies may invest in non-publicly traded securities which may be subject to illiquidity risk. Performance could be volatile; an investor could lose all or a substantial amount of its investment. Past performance is not a guarantee or a reliable indicator of future results.


PIMCO manages a number of private investment vehicles other than those listed above, which are not listed because they utilize or utilized different investment strategies or are open to new investment. All the Funds listed above are closed to new investors. Past performance is not indicative of future results, and no assurance can be made that other PIMCO-managed private investment vehicles will resemble those listed above in any respect.


The above narration contains the current opinions of the manager and such opinions are subject to change without notice. The above narration 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. No part of this presentation may be reproduced in any form, or referred to in any other publication, without express written permission.