Municipal Income Opportunity Managed Account


Strategy Overview


A risk - focused, actively managed portfolio that aims to deliver tax - efficient returns by investing in municipal bonds that are exempt from Federal taxes and the alternative minimum tax (AMT) at time of purchase. Municipal bonds may be subject to State and local taxes.

Managed by a seasoned municipal team led by David Hammer, supported by one of the industry's leading credit research teams.

The strategy seeks to take advantage of PIMCO's substantial market presence, which may result in economies of scale and greater, more efficient access to opportunities.

Use of a PIMCO managed commingled fund within the portfolio offers a number of potential advantages, including greater flexibility and diversification, and the ability to invest selectively in high yield municipal bonds.


Process & Philosophy

Investment Process

Our investment process utilizes both "top - down" and "bottom - up" strategies. Top - down strategies are deployed from a macro view of the portfolio driven by our secular outlook of the forces likely to influence the economy and financial markets over the next three to five years and our cyclical views of two - to four - quarter trends. Implementation in portfolios is effected by selecting securities that achieve the designated objectives. The municipal team views this framework through the lens of tax - exempt investing, integrating bottom - up research to select individual securities for managed account portfolios.

Municipal Bond Philosophy

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 analysts 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.

Portfolio Construction

PIMCO Municipal Income Opportunity Managed Account portfolios are constructed with two components: a core segment of individual bonds that act as a foundation; and a commingled vehicle built to complement these holdings. The core segment represents approximately 75% of the overall portfolio and focuses on high quality individual municipal bonds. The commingled vehicle makes up the balance of the portfolio and provides access to specialized investment strategies. This innovative structure allows individual accounts the flexibility to pursue a broader range of tax - advantaged, risk - return opportunities.


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 appropriate for all investors. Financial professionals seeking more information should contact their managed accounts department or call their PIMCO representative.

The Managed Accounts strategy consists of individual securities and a select combination of proprietary, commingled vehicles. These vehicles are available only through managed accounts utilizing the Managed Accounts strategy and are available by prospectus only.

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

Individual account holdings will vary depending on the size of an 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.

A word about risk:
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. 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. 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. Investors will, at times, incur a tax liability. Income from municipal bonds  is exempt from federal income tax and may be subject to state and local taxes and at times the alternative minimum tax. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. Diversification does not ensure against loss.

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 long-term, especially during periods of downturn in the market.

PIMCO does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax or legal questions and concerns. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Any tax statements contained herein are not intended or written to be used, and cannot be relied upon or used for the purpose of avoiding penalties imposed by the Internal Revenue Service or state and local tax authorities. Individuals should consult their own legal and tax counsel as to matters discussed herein and before entering into any estate planning, trust, investment, retirement, or insurance arrangement.

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. 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 LLC in the United States and throughout the world. ©2024, Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660 | 800.387.4626