RAE Fundamental Advantage PLUS Fund


Updated December 10, 2019


Seeks maximum total return, consistent with prudent investment management

Primary Portfolio

Derivatives providing long exposure to the RAE Fundamental US Large portfolio hedged by short exposure to the S&P 500 Index, backed by an actively managed portfolio of fixed income securities with an absolute return orientation


Fund Overview

A unique U.S. equity market neutral strategy

The Lipper Award Winning Strategy combines long exposure to Research Affiliates Equity (RAE) Fundamental, a systematic equity strategy, with an equivalent short position in the S&P 500 Index. This equity-market-neutral position is complemented by a bond portfolio designed to generate alpha, providing potential for positive returns with low correlation to the U.S. equity market.

Why Invest In This Fund

Systematically capitalizes on market inefficiencies

RAE Fundamental selects and weights U.S. stocks based on non-price measures of company size including sales, cash flow, dividends and book value. The strategy then refines these weights by incorporating active insights into quality, momentum, style and size with the goal of further enhancing returns. By removing price from the portfolio construction process, the fund aims to buy low and sell high, outperforming cap-weighted indexes over time.

Advantages of market neutral strategies

EEquity-market-neutral strategies offer investors a lower risk and lower volatility profile while retaining positive return potential. The strategy targets an equity beta of approximately zero, helping an investor to hold a hedged equity position with the potential for positive excess returns. The fund targets a positive total return over a business cycle regardless of general market direction while remaining broadly diversified and not overly focused on large single stock positions.

Award-winning equity market neutral performance

The fund benefits from exposure to the proprietary RAE Fundamental strategy and PIMCO’s time-tested approach to managing “PLUS” strategies. The fund’s long U.S. equity exposure is fully offset by short exposure to the S&P 500. PIMCO has been recognized by Lipper as Best Group Large Equity multiple times for the consistently strong risk adjusted performance of its equity “PLUS” strategies.

Our Expertise

PIMCO introduced the groundbreaking StocksPLUS strategy in 1986 - the same award-winning approach used across our “PLUS” portfolios - which capitalizes on the depth and breadth of PIMCO’s global resources. PIMCO has partnered with Research Affiliates to deliver systematic equity strategies since 2005. Today, we manage RAE “PLUS” portfolios across a range of objectives and market exposures.


3 Month USD LIBOR Index


The 3 Month USD LIBOR (London Interbank Offered Rate) Index is an average interest rate, determined by the ICE Benchmark Administration, that banks charge one another for the use of short-term money (3 months) in England's Eurodollar market. It is not possible to invest in an unmanaged index.


RAE Fundamental US Large


The RAE Fundamental US Large portfolio contains stocks of large U.S.-listed companies weighted by the Fundamental Index® methodology with additional factors (e.g., quality of earnings , economic profitability, momentum etc.).