Systematic, low-volatility approach to international equity investing
The fund invests in a diversified portfolio that seeks to capture the returns of less volatile and potentially higher
yielding international 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
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 international equity 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 value.
International 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 global developed stocks outside the U.S. A key tenet of the fund’s riskoriented
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.
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
MSCI EAFE Index
PRIMARY BENCHMARK DESCRIPTION
MSCI EAFE Index is an unmanaged index designed to represent the performance of large and mid-cap securities across 21 developed markets, including countries in Europe, Australasia and the Far East, excluding the U.S. and Canada. It is not possible to invest directly in the index.
RAE Low Volatility International
SECONDARY BENCHMARK DESCRIPTION
The RAE Low Volatility International portfolio contains stocks of large Developed Markets ex-U.S. 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 23 developed ex US market countries are eligible for inclusion.
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