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Municipal Ladder Managed Account

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Strategy Overview

Highlights

Benefits from PIMCO's proprietary credit research, a key advantage in a municipal bond market that has become increasingly complex and subject to credit risk.

Seeks to improve market access and pricing to provide best execution based on institutional presence.

Designed to generate an attractive, predictable stream of income with an emphasis on capital preservation; PIMCO's national ladders are exempt from federal taxes while the California ladders are exempt from federal and, in most cases, California income taxes.

Minimum average portfolio rating of A+ (by either S&P or Moody's).

No exposure to issues subject to the alternative minimum tax (AMT) at time of purchase.

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Process & Philosophy

Investment Process

As with all of our strategies, PIMCO Municipal Ladder Managed Account is guided by our top - down global macroeconomic outlook. Rigorous bottom - up analysis drives the municipal bond selection process and facilitates the identification and analysis of undervalued securities.

PIMCO has been managing municipal assets since 1997 and we are among the largest investors in the space today - our size and breadth in this sector may provide economies of scale benefits for investors, such as pricing and transaction cost advantages.

Municipal Bond Philosophy

PIMCO focuses on generating tax - efficient income and capital preservation by investing in high quality municipal bonds that are exempt from federal taxes. (In most cases, the California ladders are also exempt from California income taxes.) We seek well - structured municipal bonds that provide appropriate compensation for risks relating to calls, credit quality, liquidity, tax liabilities and market supply - demand conditions.

Portfolio Construction

Our laddered portfolios seek to diversify sector and issuer exposure and are constructed using high quality municipal bonds whose maturities are staggered from one to six, 12 or 18 years – ranges chosen specifically in an effort to add value. For example, the PIMCO 1 - 6 Year National Municipal Ladder includes a sixth year because most short-term municipal investors buy out to five years. Through this modest extension of duration, we aim to capture the pickup in yield that typically arises from lower demand for six-year issues. Similarly, our 1 - 12 Year National and California Ladders have the potential to benefit from reduced investor demand for maturities beyond 10 years, and our 1 - 18 year ladders may provide similar yields to 20 - year ladders with lower interest rate risk. Additionally, the portfolio will not invest in municipal bonds subject to the alternative minimum tax (AMT).

Disclosures

Past performance is not a guarantee or a reliable indicator of future results.


The managed account strategies described in this material are offered by Pacific Investment Management Company LLC and are available exclusively through financial professionals. Managed accounts have a minimum asset level and may not be appropriate for all investors. Financial professionals seeking more information should contact their managed accounts department or call their PIMCO representative.


Individual account holdings will vary depending on the size of an account, cash flows and account restrictions. Portfolio holdings are subject to change daily without notice. At any time an individual account managed in this strategy may or may not include securities held by another portfolio. Consequently, any particular account may have portfolio characteristics and performance that differ from another individual account in this strategy.

 

A word about risk:


All investments contain risk and may lose value. 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 the current low interest rate environment increases this risk. Current 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. Income from municipal bonds while exempt from federal taxes may be subject to state and local taxes and at times the alternative minimum tax.


The credit quality of a particular security or group of securities does not ensure the stability or safety of an overall portfolio.


PIMCO does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax or legal questions and concerns. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Any tax statements contained herein are not intended or written to be used, and cannot be relied upon or used for the purpose of avoiding penalties imposed by the Internal Revenue Service or state and local tax authorities. Individuals should consult their own legal and tax counsel as to matters discussed herein and before entering into any estate planning, trust, investment, retirement, or insurance arrangement.

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. 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. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.


Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660 is regulated by the U.S. Securities and Exchange Commission. PIMCO is a trademark of Allianz Asset Management of America LLC in the United States and throughout the world. ©2024, PIMCO.


CMR2023-0828-3085636