Strategies

Diversified Income Duration Hedged Strategy

What is Diversified Income Duration Hedged Strategy?

Diversified Income Duration Hedged Strategy is a multi-sector strategy that invests across a broad spectrum of credit market sectors including global corporate credit (investment grade and high yield) and emerging market debt. It seeks to capitalize on attractive investment opportunities offered by these sectors while minimizing interest rate exposure. Investments consist mainly of floating and variable rate securities, short duration securities, or combinations of fixed-rate bonds and derivative instruments, which together create floating income exposure. Accordingly, the strategy focuses on securities whose income tends to rise when interest rates are rising, which helps mitigate one of the primary risks of bond investing – interest rate risk.

The strategy also aims to capitalize on relative value among different credit sectors. Sector allocations will vary based on PIMCO’s assessment of global macroeconomic trends, security specific valuations and technical conditions. This active and dynamic approach is designed to allow for increased responsiveness in asset allocation to changing economic and market conditions while remaining anchored by PIMCO’s investment process and longer-term orientation. The ability to invest globally helps to improve diversification and may allow investors to benefit from differences in business cycles across regions and credit quality trends across credit sectors.

PIMCO’s ​Diversified Income Duration Hedged Strategy Experience

PIMCO’s Top‑Down Investment Process Anchors Relative Value Assessment and Sector Rotation

Sector Specialist Structure Generates Value Added Through Bottom‑up Strategies

Applications for PIMCO’s Diversified Income Duration Hedged Strategy

Investment Philosophy for Diversified Income Duration Hedged Strategy

Sources of Added Value

Risk Management / Controls

Disclosures

Past performance is not a guarantee or a reliable indicator of future results. Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, and inflation risk; investments may be worth more or less than the original cost when redeemed. 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. Bank loans are often less liquid than other types of debt instruments and general market and financial conditions may affect the prepayment of bank loans, as such the prepayments cannot be predicted with accuracy. There is no assurance that the liquidation of any collateral from a secured bank loan would satisfy the borrower’s obligation, or that such collateral could be liquidated. 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. The use of leverage may cause a portfolio to liquidate positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause a portfolio to be more volatile than if the portfolio had not been leveraged. PIMCO strategies utilize derivatives which 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. 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. Diversification does not ensure against loss.

This material contains the current 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.