Short Duration Municipal Bond Strategy

Strategy Overview

Municipal bonds are debt securities issued by or on behalf of state and local governments, their agencies and authorities, and other instrumentalities. The interest income of most municipal issues is exempt from Federal income taxes. Additionally, the interest income of municipal issues of a specific state will generally not be taxable for state income tax purposes for residents of that state.

The PIMCO Short Duration Municipal Bond strategy is designed to be appropriate for investors seeking tax-exempt income. The strategy consists of a diversified portfolio of primarily short duration, high credit quality municipal bonds that carry interest income that is exempt from federal tax and in some cases state tax.

In the municipal bond market, issuer-specific credit analysis is critical. Unlike passive strategies that typically rely solely on a rating agency for credit analysis, PIMCO applies extensive research on each municipal bond we purchase. We believe it is imperative to analyze each issuer, both at purchase and on an ongoing basis, to avoid what we feel are municipalities of deteriorating credit quality in our efforts to protect investors’ capital. Active management not only enables the strategy to invest in only the issuers and securities we endorse, but also allows us to change the portfolio structure should credit conditions change. In addition, active management allows for management of capital gains and losses, working to minimize the tax effect of gains, while harvesting losses when available.

How To Invest

Related Strategies


Short Duration

Fixed Income


Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, and inflation risk. Income from municipal bonds may be subject to state and local taxes and at times the alternative minimum tax. PIMCO strategies utilize derivatives which may involve certain costs 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. The credit quality of a particular security or group of securities does not ensure the stability or safety of an overall portfolio. There is no guarantee that this investment strategy will work under all market conditions and each investor should evaluate their ability to invest for a long-term especially during periods of downturn in the market. Diversification does not ensure against loss. Please consult your tax and/or legal counsel for specific tax questions and concerns.

This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.