Potentially capitalize on an overlooked segment of the credit market
PIMCO Preferred and Capital Securities Fund leverages PIMCO's decades of experience investing in global banks to capture opportunities in bank securities around the world – an attractive opportunity set that may offer the potential for higher yields with lower interest rate sensitivity than traditional fixed income.
Why Invest In This Fund
Higher income potential
Historically, preferred securities have offered higher yields than traditional fixed income sectors. They may also provide less sensitivity to interest rate changes, portfolio diversification, due to their low correlation to both stocks and core bonds, and tax-advantaged income.
Strong bank fundamentals
Fundamentals for U.S. banks, the primary issuers of preferred securities, are the strongest they have been in decades. Additionally, there are compelling opportunities globally, especially in countries and regions that have recovered more slowly than the U.S.
PIMCO’s advantageous global presence
PIMCO has decades of experience investing in preferreds and global banks. Our team of 17 specialists, in offices around the world, is dedicated to finding opportunities in global financials and has deep access to issuers due to PIMCO’s size and presence, which may provide more visibility into banks than smaller, less relevant investors.
The fund is managed by Philippe Bodereau, a managing director in the London office and global head of financial research. He is supported by PIMCO’s global team of nine dedicated financials analysts, nine financials traders and a deep analytics bench.
70% ICE BofAML 8% Constrained Core West Preferred & Jr Subordinated Securities Index (P8JC) and 30% ICE BofAML Contingent Capital Index (COCO)
PRIMARY BENCHMARK DESCRIPTION
The benchmark is a blend of 70% ICE BofAML 8% Constrained Core West Preferred & Jr Subordinated Securities Index (P8JC) and 30% ICE BofAML Contingent Capital Index (COCO). The ICE BofAML 8% Constrained Core West Preferred & Jr Subordinated Securities Index tracks the performance of US dollar denominated high grade and high yield preferred securities and deeply subordinated corporate debt issued in the US domestic market. Qualifying securities must be rated at least B3, based on an average of Moody's, S&P and Fitch and have a country of risk of either the U.S. or a Western European country. Qualifying preferred securities must be issued as public securities or through a 144a filing, must have a fixed or floating dividend schedule and must have a minimum amount outstanding of $100 million. The ICE BofAML Contingent Capital Index tracks the performance of investment grade and below investment grade contingent capital debt publicly issued in the major domestic and eurobond markets. Qualifying securities must have a capital-dependent conversion feature and must be rated by either Moody's, S&P or Fitch. In addition, qualifying securities must have at least one month remaining term to final maturity and at least 18 months to maturity at point of issuance. For investment grade debt, qualifying currencies and their respective minimum size requirements (in local currency terms) are: AUD 100 million; CAD 100 million; EUR 250 million; JPY 20 billion; GBP 100 million; and USD 250 million. For below investment grade debt, minimum size requirements are CAD 100 million, EUR 100 million, GBP 50 million, or USD 100 million. It is not possible to invest directly in an unmanged index.
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