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Targets steady returns, even in times of market distress, by adhering to an interest rate mandate focused on limiting downside risk potential
Invests primarily in high quality short- to intermediate-duration callable structures, dynamically adjusting duration to pursue enhanced after-tax yields relative to money market and other traditional cash strategies
Strives to maximize the tax-efficiency of portfolios through a systematic approach to tax loss harvesting and the option of National or California state-specification
Leverages our specialized separately managed accounts (SMA) team, which seeks to provide best-in-class service tailored to the needs of SMA clients
A brief monthly update on what’s happening in the muni bond market
Why SMAs Are Gaining Ground With Advisors in Wealth Management Portfolios
Our central hub for Muni content and investments
Utilizing our disciplined investment research process, Gurtin Municipal Bond Management, a PIMCO company, aims to uncover value and protect principal in clients’ municipal investment portfolios through comprehensive credit and quantitative research. Leveraging our quantitative research to calculate what we believe are more accurate valuations of non-standard (e.g., callable) security structures, we identify attractive investment opportunities. By way of holistic fundamental credit research, we also aim to select securities possessing underlying credit strength that may be misaligned with market perception, positioning us to capture alpha while mitigating downside risk.
Taking a 360-degree view, we seek to maximize tax-efficient income and help preserve principal by investing in high quality municipal bonds. Our muni experts identify opportunities and potential risks in the municipal bond market using fundamental bottom-up analysis informed by PIMCO’s top-down global macroeconomic outlook. By applying institutional discipline to a muni market traditionally comprised of smaller investors, we believe our muni platform is distinctly positioned to capitalize on market inefficiencies to unlock potential in clients’ muni portfolios. Supported by our specialized team of muni SMA experts, our muni SMA clients may additionally benefit from our belief that individual clients should receive individualized service.
With a focus on limiting price volatility, the Stability strategy has historically generated more stable returns relative to the broad municipal market during periods of volatility. To date, the strategy has never reported negative returns over any 12-month rolling period.* In pursuit of a stable return profile, portfolio managers leverage both quantitative analysis and our proprietary technology to identify what we consider the ideal mix of securities. This security mix is designed to meet a mandate of positive total returns if, over the course of the next 12 months, interest rates increase by 100 basis points (bps) and only minimal losses if interest rates increase by 200 bps over the same period.
With return of principal as the first priority, the Stability strategy also seeks to generate return on principal. Strategically allocating to callable and noncallable municipal bonds that meet our low volatility mandate, we pursue returns above those of cash and traditional cash investments, such as Treasury Bills, money market funds, and bank certificates of deposit. With higher after-tax return potential — and anchored by our strict downside risk mandate — we believe this strategy is an attractive solution for investors looking to put cash to work.
Portfolio Manager, PIMCO Municipals
*As of 31 March 2020.
The managed account strategies described in this material are offered by Gurtin Municipal Bond Management (a PIMCO Company) and are available exclusively through financial professionals. Managed accounts have a minimum asset level and may not be suitable for all investors. Financial professionals seeking more information should contact their managed accounts department or call their Gurtin or PIMCO representative.
There can be no assurance that the investment approach outlined above will produce the desired results or achieve any particular level of returns. The references to yield targets is not a guarantee, projection, or prediction of future results. There can be no assurance that the opportunities in which the strategy seeks to invest will continue to be available. PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. 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.
Gurtin Fixed Income Management, LLC dba Gurtin Municipal Bond Management, a PIMCO company (“Gurtin”) is a registered investment adviser with the U.S. Securities and Exchange Commission (“SEC”).