RAE Low Volatility PLUS EMG Fund


Updated August 19, 2019


Seeks total return that exceeds that of its benchmark

Primary Portfolio

An equity strategy that uses RAE Low Volatility Emerging Markets portfolio derivatives backed by an actively managed portfolio of fixed income securities with an absolute return orientation


Fund Overview

Systematic, low-volatility approach to emerging market equity investing

The fund invests in a diversified portfolio that seeks to capture the returns of less volatile and potentially higher yielding emerging market stocks, using the Research Affiliates Equity (RAE) Low Volatility investment strategy, a systematic approach designed to outperform the MSCI EAFE Index, plus an additional source of return potential.

Why Invest In This Fund

Offers benefits of low volatility investing while being conscious of valuations P

Proprietary screens that emphasize lower volatility stocks with higher yields and strong financial health are applied to each sector of the emerging markets. Going beyond simple volatility screens, the fund’s value orientation and focus on diversification may help investors avoid owning expensive low volatility stocks. The RAE methodology then weights stocks based on non-price measures of company size including sales, cash flow, dividends and book value

Emerging markets equity investing with the potential for a smoother ride

Investors may experience periods of high volatility when investing in the stock market, yet most accept that risk in exchange for the long-term capital appreciation potential of emerging market stocks. A key tenet of the fund’s risk-oriented approach is to manage short-term risk with respect to volatility.

Offers additional sources of potential returns

The fund provides an additional source of alpha potential by employing PIMCO’s “PLUS” implementation to equity investing. Because the fund uses equity-linked instruments, which do not require the same cash outlay as physical stocks, it seeks to generate incremental return by investing the remaining cash in an actively managed bond alpha strategy

Our Expertise

PPIMCO 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 since 2005, when they introduced fundamental indexes to the marketplace. Today, we manage RAE “PLUS” portfolios across a range of objectives and market exposures.


MSCI Emerging Markets Index


The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. It is not possible to invest directly in the index.


RAE Low Volatility Emerging Markets


The RAE Low Volatility Emerging Markets portfolio contains stocks of emerging companies ranked by the Fundamental Index® methodology and further screened by a composite score of yield, volatility, and leverage. Companies are weighted by the product of the fundamental score of each company and a factor that reduces the weight for higher beta companies (and increases those for lower beta companies). The portfolio is rebalanced on a monthly staggered basis. Companies in 21 emerging market countries are eligible for inclusion.