Strategy Overview

An innovative approach, combining defensive equity exposure and outperformance potential

The strategy provides access to Research Affiliates Equity (RAE) ¬Low Volatility, a fundamentally-weighted, smart beta-based equity strategy that focuses on lower volatility and higher income stocks, plus an additional, complementary source of alpha potential.


A Word About Risk:In managing the strategy’s investments in Fixed Income Instruments, PIMCO utilizes an absolute return approach; the absolute return approach does notapply to the equity index replicating component of the strategy. Absolute return portfolios may not fully participate in strongpositive market rallies. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflationrisk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longerdurations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the currentlow interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity andincreased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and politicalrisks, which may be enhanced in emerging markets. High-yield, lower-rated, securities involve greater risk than higher-ratedsecurities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their valuemay fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or privateguarantee there is no assurance that private guarantors will meet their obligations. Inflation-linked bonds (ILBs) issued by agovernment are fixed-income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value whenreal interest rates rise. Equities may decline in value due to both real and perceived general market, economic, and industryconditions. Leverage, including borrowing, may cause a portfolio to be more volatile than if the portfolio had not been leveraged.Entering into short sales includes the potential for loss of more money than the actual cost of the investment, and the risk that thethird party to the short sale may fail to honor its contract terms, causing a loss to the portfolio. Derivatives may involve certaincosts and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous.Investing in derivatives could lose more than the amount invested. Diversification does not ensure against loss.