Systematic, low-volatility approach to U.S. equity investing
The fund invests in a diversified portfolio that seeks to capture the returns of less volatile and potentially higher
yielding U.S. stocks, using the Research Affiliates Equity (RAE) Low Volatility investment strategy, a systematic
approach designed to outperform the S&P 500 Index, plus an additional source of return potential.
Why Invest In This Fund
Offers benefits of low volatility investing while being conscious of valuations
Proprietary screens that
emphasize lower volatility stocks with higher yields and strong financial health are applied to each sector of
the U.S. market. 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
U.S. 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 U.S. stocks. A key tenet of the fund’s risk-oriented approach is to manage shortterm
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
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 since
2005, when they introduced fundamental indexes to
the marketplace. Today, we manage RAE “PLUS”
portfolios across a range of objectives and market
S&P 500 Index
PRIMARY BENCHMARK DESCRIPTION
S&P 500 Index is an unmanaged market index generally considered representative of the stock market as a whole. The Index focuses on the large-cap segment of the U.S. equities market. It is not possible to invest directly in an unmanaged index.
RAE Low Volatility US
SECONDARY BENCHMARK DESCRIPTION
The RAE Low Volatility US portfolio contains stocks of large U.S.-listed 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.
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