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.