PIMCO Real Return Practice

Recognizing that their liabilities often are in real (inflation-adjusted) terms, investors are seeing the need for inflation hedges. These “real return” products can also offer important diversification for a portfolio. PIMCO offers a broad range of real return products to meet investors’ needs:

  • Inflation Linked Bonds (“ILBs”) – This core real return product offers liquidity, low credit risk, and a direct link to inflation
  • Commodity Indexes – When conservatively managed, this asset class can provide a hedge to inflation “surprises,” and historically has had strong diversification characteristics
  • All Asset Strategies – The Strategies allocate across a broad range of underlying strategies in an effort to produce long-term returns consistent with their benchmarks: CPI+5% for All Asset and CPI+6.5% for All Asset All Authority (CPI is the Consumer Price Index, the primary measure of U.S. inflation)
  • Real estate exposure as measured by a REIT index

What are Inflation Linked Bonds?

How Large are the Inflation Linked Bond Markets?

Applications for Real Return Products

PIMCO Inflation Linked Bond Management Experience

Investment Philosophy for Real Return Management

Sources of Added Value Performance

Risk Management/Controls

How To Invest

Related Strategies

Fixed Income

Real Asset

Related

Disclosures

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. Inflation-linked bonds (ILBs) issued by a government are fixed-income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value when real interest rates rise. Commodities contain heightened risk including market, political, regulatory, and natural conditions, and may not be suitable for all investors. The value of real estate and portfolios that invest in real estate may fluctuate due to: losses from casualty or condemnation, changes in local and general economic conditions, supply and demand, interest rates, property tax rates, regulatory limitations on rents, zoning laws, and operating expenses. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and while generally supported by a government, government-agency or private guarantor there is no assurance that the guarantor will meet its obligations. Investing in foreign denominated and/or domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. 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 the overall portfolio. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Diversification does not ensure against loss.

The Consumer Price Index (CPI) is an unmanaged index representing the rate of inflation of the U.S. consumer prices as determined by the U.S. Department of Labor Statistics. There can be no guarantee that the CPI or other indexes will reflect the exact level of inflation at any given time. It is not possible to invest directly in an unmanaged index.

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.