Text on screen: PIMCO provides services only to qualified institutions and investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized.
Images on screen: Mohit and Saurabh walking
Text on screen: Q: What is PIMCO’s active approach to credit?
Text on screen: Mohit Mittal, CIO Core Strategies
Mittal: At PIMCO, our approach to credit has a clear objective, consistent, repeatable alpha across all market environments. There are three key things that help us achieve that .
Text on screen: TITLE – Three keys to pursuing alpha; BULLETS – Market structure
First is associated with the market structure. Almost half of the global bond market is made up of investors like
Images on screen: Federal Reserve, corporate buildings, stock market ticker
the central banks, the insurers, as well as passive strategies with objectives and constraints that create persistent market inefficiencies.
Active managers can act on these opportunities versus passive strategies that track them.
Text on screen: TITLE – Three keys to delivering alpha; BULLETS – Market structure, Index construction
The second is associated with the index construction itself. In the index construction, indices give high weight to issuers that have the most debt outstanding.
The more levered the company is, it will have more debt outstanding and it'll be it will be a company with weak fundamentals and not strong fundamentals.
Text on screen: TITLE – Three keys to delivering alpha; BULLETS – Market structure, Index construction, Depth of resources
And the third factor is the strength of our resources.
Our approach is based upon deep bench of credit research resources,
Images on screen: PIMCO Trade floor
trading specialists and our global credit platform to help us navigate the complexity of the credit markets.
Text on screen: Q: What differentiates our portfolio construction?
Text on screen: Saurabh Sud, Portfolio Manager
Sud: To build on Mohit's point, our framework for portfolio construction is anchored on three distinct active layers. Each plays a crucial role in helping us generate alpha overtime.
Full page graphic showing a four-level pyramid titled “Adding value through active management.” The pyramid is organized from bottom to top as: Passive Benchmark, Structural Opportunities
The 1st is the structural layer, that is where our scale and market access gives us an edge.
Full page graphic: Sourcing reverse inquiries to generate alpha,” shows cumulative growth over time from 2020 through 2026. The horizontal axis displays years from 2020 to 2026, and the vertical axis shows values in billions of dollars ($ bn) ranging from 0 to 200.
A turquoise-filled area chart rises steadily from near zero in 2020, indicating continuous growth over the period. Growth is gradual through 2021 and 2022, reaching approximately $60 billion by early 2023. The trend continues upward in 2024, accelerating through 2025 and 2026. The chart ends at approximately $175 billion, highlighted by a large callout reading “$175bn+” in the upper-right corner.
For example, one way to generate alpha overtime is through sourcing, reversing queries, which allows us to influence primary market issuance and capture meaningful value for our clients.
Images on screen: Telecommunications
Recently, we purchased taps from a large telecom operator at an average discount versus their existing bonds. This meant PIMCO secured exposure to an issuer we believe has an attractive credit profile.
Meanwhile, the company also benefited from certainty of execution, a short turn around time and cost savings by not having to conduct a public roadshow.
Text on screen: TITLE – Adding value through active management
Full page graphic showing a four-level pyramid titled “Adding value through active management.” The pyramid is organized from bottom to top as: Passive Benchmark, Structural Opportunities, Thematic Positioning
Mittal: The second layer is the thematic positioning. Using this approach, we can identify sectors that we think will do well from a top down point of view and then augment that with the bottom up research based upon individual companies.
Sud: And finally,
Full page graphic showing a four-level pyramid titled “Adding value through active management.” The pyramid is organized from bottom to top as: Passive Benchmark, Structural Opportunities, Thematic Positioning, and Opportunistic Expressions
I would highlight the opportunistic layer issuer and industry specific events, the way Mohit pointed out, and news flow can lead to price dislocations.
This creates pockets of idiosyncratic opportunities that are not dependent on general market moves.
Text on screen: Q: What sets apart PIMCO’s credit platform
Mittal: At a high level. There are two unique things about the PIMCO platform that sets it apart.
Images on screen: PIMCO trade floor
First is the breadth of resources. Those resources include 85 plus analysts, the special situation resources that can be deployed when there's a dislocation in individual credit, as well as the analytics and the technology resources that are needed to help execute credit along with the credit execution desks.
And then the second is the integrated platform. Last year, for example, our team started working on a private
Images on screen: Data Center
opportunity with a large hyperscaler looking to build a large data center
Text on screen: We seek opportunities across the credit spectrum
Images on screen: Data Centers
What started as a private opportunity ended up being a opportunity for public markets, because of that integrated platform that allows us to present solutions for not only our clients, but fit their needs as well.
Text on screen: For more insights and information visit pimco.com
Text on screen: PIMCO
Disclosures
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 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 low interest rate environments increase this risk. 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. Equities may decline in value due to both real and perceived general market, economic and industry conditions. Mortgage- and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee, there is no assurance that private guarantors will meet their obligations. 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. 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.
This video contains examples of the firm's internal investment research capability. The data contained may be stale and should not be relied upon as investment advice or a recommendation of any particular security, strategy or investment product. In selecting case studies, PIMCO considers investment performance in addition to other factors, including, but not limited to, whether the example illustrates the particular investment strategy being featured and processes applied by PIMCO to making investment decisions. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.
This material contains the 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. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.
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