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PIMCO Tactical Opportunities Fund

PIMCO Tactical Opportunities Fund aims to capture opportunities that are often overlooked by hedge funds and traditional private equity investors in global, public and private residential, commercial, and corporate credit markets.

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Nelson Yuan, Product Manager: The reason why I think now is an attractive time to be looking at the alternative space is because one of the most attractive risk adjusted opportunities that we see in the market today is capturing illiquidity premium.

Shots of PIMCO employees working.

We believe that the market is far too focused on daily liquidity and therefore is paying up for daily liquidity at the expense of giving up the illiquidity premium and capturing some of those returns there.

Lalantika Medema, Product Manager: From a supply side, what you're also seeing is that a lot of the traditional financial institutions that typically were liquidity providers or lenders in the market have really taken a step back because of different regulations, whether it's Basel III or Dodd Frank,

Shots of the New York Stock Exchange and other stock exchanges from around the world.

these are all things that are really inhibiting that kind of normal process that the market has witnessed before the crisis. To that extent this all opens up opportunities for well-resourced private capital to step in and fill either that liquidity or that lending void.

In addition, we also think that the one thing you can be certain of in the coming years is that there will be volatility and there certainly will be some uncertainty in credit markets.

Shots of PIMCO employees working with text on screen: PIMCO Tac Opps Strategy

Lalantika: Tac Opps is a hybrid opportunistic strategy that's uniquely positioned to take advantage of the dislocations and uncertainty that we are seeing in credit markets. 

Nelson: Tac Opps is a very unique strategy in a sense that the liquidity profile of the fund sits between hedge funds and private equity funds. As a result, it is able to take advantage of opportunities that fall out between those two different types of investment classes.

Lalantika: The strategy is able to traverse public and private markets. Clearly we see these opportunities ebb and flow over time. And as we do see volatility and uncertainty in the future, we think that having the flexibility to move across these credit markets and these credit sectors will be instrumental in achieving the fund's objectives.

Nelson: Finally, the income share class for Tac Opps we believe is a very attractive feature, particularly for investors that are looking to generate some level of income as well as trying to maximize total return in their investments.

As a result, we believe that Tac Opps is uniquely positioned to capitalize on opportunities that may be a little bit more illiquid than what a hedge fund can normally do, but may not necessarily be a high enough return target for a traditional private equity fund.

Shots from a PIMCO forum.

Lalantika: PIMCO is able to bring to the table a few different kinds of areas of expertise that I think really help to substantiate our investment in this opportunity.

The first is, when you think about the sellers of these assets, they tend to be major financial institutions that are either acting on their own behalf and selling assets they hold on balance sheet, or acting as an intermediary in terms of working with other sellers and coming to potential buyers.

Text on screen:  Why PIMCO Tac Opps Strategy - Global relationships

In both cases PIMCO has relationships with these institutions globally that allows us to be one of the first calls that they make during the sales process.

Nelson: Second, flexibility is of critical importance.

Text on screen:  Why PIMCO Tac Opps Strategy - Flexibility and deep bench of talent

It isn't only one market opportunity that's always attractive.

Shots of PIMCO employees working.

We have to be able to be flexible and be able to move across different markets at various times across different markets.

Lalantika: And what we're able to do in that capacity is draw on over 60 portfolio managers and analysts that are focused on our private equity strategies to complete and execute on that underwriting and due diligence for both public and private opportunities.

Shots of PIMCO employees working.

In addition, we manage strategies across the liquidity spectrum. This allows us to serve as a one stop solution provider for sellers of these different assets. In many cases they may be looking at selling assets that are up and down the capital structure or within different credit markets. We manage strategies that could be a home to any of those different assets and as a result can often be a more holistic solution provider.

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