PYLD in 5

Text on screen: PIMCO

Text on screen: PIMCO provides services only to qualified institutions and investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized.

Text on screen: Adam Browne, Head of ETF Sales

BROWNE: Hi, I’m Adam Browne, Head of ETF distribution for PIMCO.

In today’s uncertain economic environment, advisors are increasingly turning to flexible investment products.

We’ve seen that play out as PIMCO’s Multisector bond active ETF, ticker symbol (PYLD) has become one of the industry’s fastest-growing active bond ETFs and a fixed income staple in many investors’ portfolios.

My colleague and Portfolio Manager Sonali Pier will review the market opportunity and why PYLD may be a fit for Advisors and Fixed Income investors.

Text on screen: Market Dynamics and FI Implications

Text on screen: Sonali Pier, Portfolio Manager, Multi-Sector Credit

PIER: We’ve seen a lot of volatility this year as markets quickly adjusted to tariff announcements.

Text on screen: Starting level of yield remains elevated

The starting level of yield remains elevated and a good indicator of potential forward returns.

While many fixed income markets have rebounded, significant uncertainty remains as investors grapple with the full economic impact from tariffs, other policy changes and ongoing focus on deficits.

As a result, we continue to emphasize the attractiveness of high-quality fixed income, remaining up-in-quality to potentially provide resilience.

Text on screen High quality fixed income for resilience

That said, volatility can create dispersion and overshoots leading to a target rich environment for active management. The flexibility and liquidity in the portfolio enables us to stand ready to deploy capital when we see dislocations.

Text on screen: PYLD ETF

PIER: P Yield, ticker PYLD, is an active multisector credit ETF that we launched in June of 2023. It has quickly become one of the fastest growing active ETFs in the industry.

We believe it is well positioned to navigate today’s challenging and volatile market environment.

Text on screen:

PYLD Offers:

• Exposure to a broad array of credit sectors
• Broad credit and macro toolkit
• Focus on resiliency

PYLD is designed to invest across a broad opportunity set of spread sectors, offering access to diversifying exposures in unique areas of the fixed income market.

PYLD focuses on expressing PIMCO’s strategic relative value views across spread sectors, coupled with active management of duration, which is especially appealing given the ongoing elevated interest rate market volatility.

PYLD’s full credit and macro toolkit is an important feature, with the ability to actively manage credit relative value and macro volatility through the level of duration, diversifying to global duration and curve positioning.

This flexibility and resiliency are increasingly important given elevated uncertainty.

Text on screen: Current Areas of PYLD Focus

FULL SCREEN GRAPHIC: PYLD allocation changes since inception

Text on screen: PYLD allocation changes since inception

Image on screen: The image features a bar graph showing allocation changes for PIMCO Multisector Bond Active ETF from June 2023 through May 2025. The graph has six bars shaded in gray, representing different asset classes in the fund, with each bar showing the expected allocation range for the asset class. For each bar, a line graph overlay shows the actual allocation for the asset at any given time over the period. On the far left, the first bar represents investment grade, with an expected allocation range of 25% to 75%. On May 31, 2025, allocation is 22.4%, down from 41.9% in June 2023. To the right is the next bar, representing high yield, with an expected allocation range of 10% to 50%, with a May 2025 allocation of 10.9%, down from 18.8% in June 2023. Next is agency mortgage-backed securities, with an expected allocation range of 0% to 40%, with allocation at 22.2% in May 2025, up slightly from 21.4% in June 2023. Securitized credit has a range of 0% to 40%, and was at 29.3% May 2025, up from 7.6% in June 2023. Bank loans, with a range of 0% to 20%, were at 2.1% in May 2025, up from 0.3% in June 2023. Emerging markets, with a range of 0% to 20%, were at 3.7% in May 2025, up from 0.9% in June 2023.

As of 31 May 2025. Source: PIMCO. Expected Allocation Ranges are indicative only – not driven by prospectus guidelines and subject to change without notice. Securitized Credit includes: Non-agency Residential Mortgage, CLOs, ABS, and CMBS. Bond exposure is defined as the market exposure inclusive of notional values. *Percent bond exposure (PBE%) shows exposure to a given sector divided by the total assets of the Fund. PBE does not utilize a derivative offset bucket like Percent Market Value (PMV%), which is the Fund's official sector reporting. PBE% may not equal 100 due to rounding.

PIER: We’ve made meaningful changes to our allocations since inception as our strategic relative value views have evolved.

Heading into the volatility in early 2025, we leaned into higher quality areas of the opportunity set such as Agency mortgages and securitized, and deemphasized corporate credit as spreads were tight.

This put the portfolio in a resilient position to weather the volatility in early April, and we haven’t had to make large, drastic, or reactionary allocation changes as a result.

While corporate credit did widen during the risk-off moves in April, even at the local wides, spreads were still pricing in muted recession probabilities such that valuations didn’t warrant materially adding risk.

At the same time, we saw other higher quality credit areas like Agency mortgages widen alongside corporate credit and so we incrementally added to positions in Agency mortgages.

We have been quite active in the portfolio on duration, as rates have remained volatile. We employ a toolkit that includes overall level of duration, but also areas like curve positioning and looking globally across the interest rate markets.

FULL PAGE GRAPHIC: Duration allocation history

As of 31 May 2025. Source: Bloomberg, PIMCO. 10yr UST Yield is represented by the U.S. 10 Year Treasury yield. DWE: Duration Weighted Exposure is the percentage weight of each sector’s contribution to the overall duration of the fund

Text on screen: TITLE – Duration allocation history; SUBTITLE – PYLD Duration Positioning vs. 10yr UST Yields

Image on screen: A line graph shows the duration positioning of PYLD from June 2023 to 31 May 2025. At the end of the chart, in May, the 10-year Treasury yield is around 4.4%, up from about 3.75% in June 2023. The Treasury yield fluctuates over the period between a low of about 3.6% around September 2024, and a high of around 5% in October 2023. During 2025, the yield has been trending downward from its last peak of around 4.5% early in the year.

Our duration positioning is not a simple sum of our bond holdings, rather we have been actively changing our duration positioning as we see opportunities given the interest rate volatility.

FULL PAGE GRAPHIC: PYLD duration historical positioning

As of 31 May 2025. Source: Bloomberg, PIMCO. DWE: Duration Weighted Exposure is the percentage weight of each sector’s contribution to the overall duration of the fund

Text on screen: TITLE – PYLD duration historical positioning

Image on screen: A bar graph shows the monthly duration historical positioning for PIMCO Multisector Bond ETF from June 2023 to May 2025. In May, duration of the fund is at 4.54 years, down from 5.37 years in June 2023, but recently the metric has been trending upward, off a low of 4.2 years in February 2025. Each bar shows the duration weighted exposure of seven different asset classes: U.S. TIPS, U.S. ex-TIPS, UK, Australia, emerging markets, other and Europe ex-UK. In terms of sector contribution, US TIPS make up the lion’s share of the historical positioning over time, with the other asset classes making up the rest.

We’ve dynamically managed where we source our duration through regional diversification, and are finding opportunities in high-quality interest rate markets such as in the UK and Australia. These markets are more sensitive to high policy rates and should see additional easing.

We also have TIPS in the portfolio, as an inflation hedge as we believe markets continue to underprice the potential for structurally higher inflation.

Additionally, we see many factors such as high deficit spending and debt to GDP ratios driving higher back-end rates and a greater term premium, and therefore we employ a curve steepener in PYLD.

Text on screen: High deficit spending and debt to GDP ratios drive higher back-end rates and a greater term premium.

Text on screen: Role in portfolio

BROWNE: By design, PYLD has an exceptionally broad mandate. We see advisors and investors using PYLD in 3 ways:

Text on screen:

• Standalone Multisector Solution
• Complement to traditional core or index exposures
• Diversification tool vs. higher volatility sectors

First as a standalone multisector solution: Instead of juggling multiple single-sector strategies, many investors are finding that PYLD offers a comprehensive solution, providing access to unique spread sectors all in one place.

Second, as a complement to traditional core or index exposures: PYLD can serves as an addition to traditional core and core-plus portfolios which are more rigid in their positioning with duration and across sectors. Adding diversified spread sectors and increased flexibility can help to enhance overall portfolio resilience.

And finally as a diversification tool versus higher volatility sectors:  For those looking to balance out higher volatility sectors such as equities, High Yield and Bank Loans, PYLD can serve as a solid diversification tool, allowing investors to pursue elevated yield and return potential without taking on excessive risk.

Text on screen: For more insights and information, visit pimco.com

Text on screen: PIMCO

Disclosure

Investors should consider the investment objectives, risks, charges and expenses of the funds carefully before investing.  This and other information are contained in the Fund’s prospectus, which may be obtained by contacting your PIMCO representative.  Please read the prospectus carefully before you invest.

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A word about risk: Investing in the bond market is subject to certain risks including the risk that fixed income securities will decline in value because of changes in interest rates; the risk that fund shares could trade at prices other than the net asset value; and the risk that the manager's investment decisions might not produce the desired results. Sovereign securities are generally backed by the issuing government. Obligations of U.S. government agencies and authorities are supported by varying degrees, but are generally not backed by the full faith of the U.S. government. Portfolios that invest in such securities are not guaranteed and will fluctuate in value. High-yield, lower-rated, securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not.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. Currency rates may fluctuate significantly over short periods of time and may reduce the returns of a portfolio. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee there is no assurance that private guarantors will meet their obligations. 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. Treasury Inflation-Protected Securities (TIPS) are ILBs issued by the U.S. government. 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 an investment manager will not produce the desired results, and that certain policies or developments may affect the investment techniques available to the manager in connection with managing the strategy. Diversification does not ensure against loss.

Statements concerning financial market trends or portfolio strategies are based on current market conditions, which will fluctuate. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest for the long term, especially during periods of downturn in the market. Outlook and strategies are subject to change without notice.

Portfolio structure is subject to change without notice and may not be representative of current or future allocations.

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CMR2025-0612-4581614