Shots of PIMCO employees in office
Bill Gurtin, Founder, Gurtin Municipal Bond Management: The muni market is highly inefficient, because it is dominated by retail investor behaviors.
David Hammer, Head of Municipal Bond Portfolio Management: We apply an institutional discipline to this market and our strategies, which helps us meet different client objectives, while unlocking potential returns.
Shots of PIMCO employees working at computers
Bill: When we look to maximize net returns, we have to quickly recognize opportunities and assess relative value. An example would be callable municipal bonds, which are often mispriced in the retail-dominated municipal space and can consistently provide a source of structural alpha.
Shots of PIMCO employees working in office
David: We think it's important that munis are evaluated in a broader context.
So this starts with our top-down investment process, where we forecast a number of macroeconomic outcomes. Economic factors have an impact on perhaps how munis will perform versus other asset classes within fixed-income credit markets.
Shots of a PIMCO meeting and employees working.
It's very important to draw on inputs from outside of the muni market.
Bill: We use bottom-up research by deploying forward-looking, proprietary credit research. This allows us to find hidden gems by leveraging both our credit and quantitative research, to uncover mispriced and misunderstood bonds and issuers and allows us to manage risk.
Shots of Bill and David in a meeting and employees working
David: At PIMCO we leverage our economies of scale for investors by aggregating our order flow across all of our separately managed accounts, from very large accounts to smaller accounts, by generating one order and one trade for all of our different account needs.
This allows us to reduce the transaction cost for investors, shrink the bid ask, and we believe, over time, potentially lead to better returns for municipal bond portfolios.
Bill: We believe PIMCO's broad set of muni solutions,
Shots of Bill and David in a meeting
and the institutional discipline we apply to the market, can help clients meet a broad range of different objectives.
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All investments contain risk and may lose value. Income from municipal bonds is exempt from federal income tax and may be subject to state and local taxes and at times the alternative minimum tax; a strategy concentrating in a single or limited number of states is subject to greater risk of adverse economic conditions and regulatory changes. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Derivatives 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. Management risk is the risk that the investment techniques and risk analyses applied by PIMCO will not produce the desired results, and that certain policies or developments may affect the investment techniques available to PIMCO in connection with managing the strategy.
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