Investment opportunities in alternative credit are expanding. At the same time, private market allocations for insurance companies are growing as a way to enhance income, diversify investments, and seek to meet return goals. At PIMCO’s recent Financial Institutions Group (FIG) Summit in New York, Devin Chen, head of real estate strategy, Mary Anne Guediguian, account manager in the financial institutions group, Lalantika Medema, alternative credit strategist, and Jamie Weinstein, head of corporate special situations, discussed PIMCO’s outlook for alternative credit and how to position for opportunities.

Q: “Private credit” and “alternative credit” are broad terms that can mean different things to different investors. How does PIMCO define and think about these areas?

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The Author

Devin Chen

Portfolio Manager, Commercial Real Estate

Mary Anne Guediguian

Account Manager, Insurance

Lalantika Medema

Alternative Credit Strategist

Jamie Weinstein

Portfolio Manager, Head of Corporate Special Situations

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Disclosures

Past performance is not a guarantee or a reliable indicator of future results.

All investments contain risk and may lose value. Alternative and private credit involves an investment in non-publically traded securities which are subject to illiquidity risk. Portfolios that invest in alternative and private credit may be leveraged and may engage in speculative investment practices that increase the risk of investment loss. Investments in may also be subject to real estate-related risks, which include new regulatory or legislative developments, the attractiveness and location of properties, the financial condition of tenants, potential liability under environmental and other laws, as well as natural disasters and other factors beyond a manager’s control. Residential or commercial mortgage loans and commercial real estate debt are subject to risks that include prepayment, delinquency, foreclosure, risks of loss, servicing risks and adverse regulatory developments, which risks may be heightened in the case of non-performing loans. Investing in distressed loans and bankrupt companies is speculative and the repayment of default obligations contains significant uncertainties. 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.

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. Investors should consult their investment professional prior to making an investment decision.

Forecasts, estimates and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Forecasts and estimates have certain inherent limitations, and unlike an actual performance record, do not reflect actual trading, liquidity constraints, fees, and/or other costs. In addition, references to future results should not be construed as an estimate or promise of results that a client portfolio may achieve.

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