Diversification and inflation-hedging potential
Harnessing two of PIMCO’s core strengths – commodity-linked investing and active fixed income management – the fund provides access to broad commodity market returns, with enhanced return potential from actively managed bonds collateral.
Why Invest In This Fund
Enhanced index strategy
The fund captures the performance potential of commodities through derivative exposure to the Credit Suisse Commodity Benchmark, a broad-based index. The fund collateralizes its commodity exposure with a portfolio of high quality, short term bonds that serve as an additional source of return.
Inflation-hedging, diversification potential
Commodities have had a positive correlation with inflation, typically appreciating when inflation spikes; they also have had low or negative correlation with stocks and bonds, which can enhance portfolio diversification. It should be noted, however, that commodities may be volatile and that diversification doesn’t protect against loss.
The fund capitalizes on PIMCO’s experience in commodity-linked derivatives and active fixed income management. The management team looks to add value by avoiding the inefficiencies of passive commodity indexing, seeking out the potential for additional excess return opportunities within commodity markets and actively managing the collateral portfolio.
The strategy is managed by veteran real return investors Nicholas Johnson and Greg Sharenow. A leading global commodities manager, PIMCO launched its first enhanced index strategy two decades ago and its first commodity-linked strategy in 2002.
Credit Suisse Commodity Benchmark
PRIMARY BENCHMARK DESCRIPTION
The Credit Suisse Commodity Benchmark is an unmanaged index composed of futures contracts on 30 physical commodities. The objective of the benchmark is to gain exposure to the broad commodity universe while maintaining sufficient liquidity. Commodities were chosen based on world production levels, sufficient open interest, and volume of trading. The index is designed to be a highly liquid and diversified benchmark for commodities as an asset class. It is not possible to directly invest into an unmanaged index.
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