Short-term bond markets are in the spotlight as the Federal Reserve normalizes interest rates and the implementation of money market reform is set to begin later this year. Recent market volatility further underlines the importance of taking a thoughtful approach to cash allocation. Jerome Schneider, head of PIMCO’s short-term investing and recently named Morningstar 2015 Fixed-Income Fund Manager of the Year (U.S.) along with his team on the PIMCO Short-Term Fund, and Andrew Wittkop, portfolio manager, explain the dynamics of the short-term market and discuss PIMCO’s approach to managing cash and short-term investments.

Q: It has been over a month since the Federal Reserve’s first rate hike in nine years. How have cash markets performed and what is the takeaway for cash investors as they look ahead in 2016?

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The Author

Jerome M. Schneider

Portfolio Manager

Andrew T. Wittkop

Portfolio Manager, Treasuries, Agencies, Rates


Short-term strategies are not federally guaranteed in the U.S. and may lose value.

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 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. Management risk is the risk that the investment techniques and risk analyses applied by PIMCO will not produce the desired results, and that certain policies or developments may affect the investment techniques available to PIMCO in connection with managing the strategy. Investors should consult their investment professional prior to making an investment decision.

Morningstar Awards 2015©. Morningstar, Inc. All Rights Reserved. Awarded to Jerome Schneider and Team for U.S. Fixed-Income Fund Manager of the Year. The Morningstar Fixed Income Fund Manager of the Year award is based on the strength of the manager, performance, strategy, and firm's stewardship.

This material contains the opinions of the author but not necessarily those of PIMCO 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. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2016, PIMCO.