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Strategy OverviewThe PIMCO Real Income Strategy is a unique and innovative investment solution that seeks to provide retirees with efficient and systematic income from their savings. The strategy is a liquid investment that helps guard against the effects of inflation on purchasing power. In an effort to achieve these goals, the strategy invests primarily in U.S Treasury Inflation-Protected Securities (TIPS) with maturities structured to provide systematic real (inflation-adjusted) distributions of principal and interest so that all assets will have been distributed upon the designated maturity date.
TIPS are issued by the U.S. government, which guarantees their timely payment of interest and return of principal at maturity. Their face value is adjusted in step with changes in the rate of inflation, with interest paid on the adjusted amount. At maturity, a TIPS investor receives the original principal plus the sum of all the inflation adjustments since the bond was issued. Of course, the value of a TIPS investment is not guaranteed and can decline if inflation-adjusted interest rates rise.
Rather than strategies that put their savings at risk, retirees need a solution that will provide an anchor for their portfolio by generating systematic, real (inflation-adjusted) income to supplement traditional retirement sources such as social security, defined benefit plans, portfolio income or annuities.
Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, and inflation risk. Inflation-linked bonds (ILBs) issued by a government are fixed-income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value when real interest rates rise. Treasury Inflation-Protected Securities (TIPS) are ILBs issued by the U.S. Government. Certain U.S. Government securities are backed by the full faith of the government, obligations of U.S. Government agencies and authorities are supported by varying degrees but are generally not backed by the full faith of the U.S. Government; portfolios that invest in such securities are not guaranteed and will fluctuate in value. 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 and each investor should evaluate their ability to invest for a long-term especially during periods of downturn in the market.
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.
No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Pacific Investment Management Company LLC, 840 Newport Center Drive, Newport Beach, CA 92660, 800-387-4626. ©2014, PIMCO.
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