For many investors, stock market exposure represents an important expected driver of long-term capital appreciation. However, equity markets do not always deliver positive returns and often are characterized by periods of high volatility. Consequently, many investors seek strategies that will provide exposure to the long-term growth benefits of owning stocks, while allowing for better downside risk mitigation. 

To meet these needs, PIMCO has introduced a long/short equity strategy which aims to provide a positive return with lower volatility than the equity market over the long term. Although the strategy does not explicitly aim to manage short-term volatility, it has greater ability than many traditional long-only strategies to manage downside risk, which provides the opportunity for strong risk-adjusted returns over a full market cycle. 

The PIMCO Long/Short Equity Strategy is a concentrated, long-biased equity strategy with the ability to actively manage equity market exposure by adjusting the portfolio’s mix of long and short equity, and cash or cash equivalent positions. The strategy, which has nearly a 10-year track record, uses both top-down and bottom-up analysis to construct a high-conviction portfolio of long positions with selective shorts. The strategy’s concentrated and deeply researched equity portfolio looks to capture and magnify gains when markets rise. At the same time, the strategy has greater ability to manage downside risk given its flexibility to hold cash and selectively short stocks. Unlike many strategies that have a limited ability to raise significant cash, let alone short, the strategy’s flexible approach facilitates access to additional sources of alpha and can result in reduced correlation with broader equity market indexes.

Investment philosophy

Investment process

An experienced investor with a time‑tested strategy

Applications for the strategy

PIMCO's approach to managing equities

Advantages of long/short equity investing

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​Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. Equities may decline in value due to both real and perceived general market, economic and industry conditions. Investments in value securities involve the risk the market’s value assessment may differ from the manager and the performance of the securities may decline. Investing in securities of smaller capitalization and mid-capitalization companies tend to be more volatile and less liquid than securities of larger companies. 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. Entering into short sales includes the potential for loss of more money than the actual cost of the investment, and the risk that the third party to the short sale may fail to honor its contract terms, causing a loss to the portfolio. 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. There is no guarantee that these investment strategies will work under all market conditions or is suitable for all investors and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market.

This material contains the 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.