Strategy Overview

A fixed income strategy with the flexibility to tap opportunities across the bond universe

Dynamic Bond Strategy is PIMCO’s most flexible bond strategy, capable of implementing the full breadth of the firm’s expertise across global fixed income markets to offer defense in scenarios that are challenging for bonds while positioning to benefit from market shifts.

Why invest in this strategy?

Dynamic Bond Strategy offers key benefits to investors in uncertain markets – including the flexibility to navigate challenges and uncover opportunities along with the potential to be more defensive than traditional core bond strategies when rates rise. Dynamic Bond Strategy can be:

  • A comprehensive fixed income solution with core-bond-like volatility
  • A diversified core bond complement

What makes PIMCO Dynamic Bond Strategy different?

It’s all in our approach, which takes a more balanced view of investing, seeking a blend of structural and tactical opportunities across rates, credit, currency and volatility markets. Three key features support this approach:

  • Lower correlation to traditional equity
    A top-down macro process and bottom-up ideas are incorporated into the strategy, offering diversified exposures across all fixed income risk factors. Because focus is placed on identifying the best opportunities to generate alpha and less on credit, the strategy tends to have a lower correlation to equity markets, helping diversify risk.
  • One of the world’s premier fixed income managers
    Drawing on PIMCO’s industry-leading expertise, the strategy has great latitude to benefit from a time-tested investment process, global resources and a veteran portfolio management team.
  • Time-tested proactive risk management
    The portfolio management team and risk managers are “joined at the hip” to ensure that the strategy focuses on risk factors that drive returns and that portfolio risks are sufficiently diversified.

What does it mean to be flexible?

Dynamic Bond Strategy is benchmark agnostic, giving it the flexibility to navigate challenging markets to find opportunities. This flexibility drives our investment approach in two fundamental ways:

  1. Flexibility opens the parameters for identifying appropriate duration and spread risk target ranges – or “home base” – for any given macro environment. Targets are reviewed on an ongoing basis and adjusted for any significant changes in our longer-term outlook. In this way, we seek to optimize the portfolio to maintain core-bond-like volatility and maximum return within that level of risk.
  2. “Home base” flexibility allows the strategy to take advantage of tactical and idiosyncratic opportunities across the global fixed income markets. This ability to go long and short across the full spectrum of markets – together with its wide duration range (-3 to +8 years) – helps us identify and position for opportunities with the most attractive return/risk characteristics, while also navigating a wider variety of market conditions than benchmark-constrained strategies.

Disclosures

Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. 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 the current low interest rate environment increases this risk. Current 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. 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. The credit quality of a particular security or group of securities does not ensure the stability or safety of the overall portfolio. 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. Investors should consult their investment professional prior to making an investment decision.

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.