Strategy Spotlight

Optimal Credit Investing With PIMCO Corporate Bond Ladder Strategies

PIMCO corporate bond ladder strategies seek to significantly boost potential income and yield by actively identifying value while avoiding severe downgrades and defaults.

In search of yield and income – and in the face of dwindling inventories and declining liquidity in the corporate bond market – many investors have moved to laddered solutions that take a passive, set-and-forget approach to credit investing. However, PIMCO’s decades of experience in managing global credit assets inform us that a rigid approach to laddering bonds may overlook sources of risk and incremental return. The global corporate bond market is large and complex; in our view, optimal credit investing requires an active approach to buying the right bond, at the right time and price, and then continuing to monitor the credit exposure until maturity.

PIMCO corporate bond ladder strategies aim to actively identify value along the maturity spectrum (also known as the yield curve), capture additional yield through our proprietary credit analysis and avoid defaults via actively monitoring credit risk until maturity. In several critical ways, PIMCO corporate bond ladder strategies differ from a do-it-yourself, or passive, approach to bond ladder investing. Our rigorous credit research and active management seek to significantly boost potential income and yield.

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The Author

Amit Arora

Portfolio Manager, Investment Grade

Jessica Pestronk

Account Manager, Global Wealth Management

Geoffrey Bowers

Credit Strategist


Related Strategy


The managed account strategies described in this material are offered by Pacific Investment Management Company LLC and are available exclusively through financial professionals. Managed accounts have a minimum asset level and may not be suitable for all investors. For more information about this product, contact your financial advisor. Financial professionals seeking more information should contact their managed accounts department or call their PIMCO representative.

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. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and while generally backed by a government, government-agency or private guarantor there is no assurance that the guarantor will meet its obligations. 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. Diversification does not ensure against loss. Investors should consult their investment professional prior to making an investment decision.

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.

Individual results may vary as a result of market conditions, trading costs, and other factors which may be unique to each account.  Individual account holdings will vary depending on the size of the account, cash flows and account restrictions.  portfolio holdings are subject to change daily without notice.  At any time an individual account managed in this strategy may or may not include securities held by another portfolio.  Consequently, any particular account may have portfolio characteristics and performance that differ from another individual account in this strategy.

References to specific securities and their issuers are not intended and should not be interpreted as recommendations to purchase, sell or hold such securities. PIMCO products and strategies may or may not include the securities referenced and, if such securities are included, no representation is being made that such securities will continue to be included.

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. 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. ©2017, PIMCO.