Education

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Understanding Alternative Investments
Across the Spectrum: Understanding Public and Private Credit
How can alternatives help during periods of market volatility?
Narrative Economics
Sustainable Investing: Understanding ESG in Bonds
How behavioral science can help make you a better investor
A Tiered Approach to Liquity
Why We’re Predictably Irrational
Understanding Preferred Securities

Risk Factor Diversification

Risk Factor Diversification

Traditional portfolio construction approaches, which focus on asset class diversification, may fall short of investors’ goals. A more efficient diversification strategy may be to allocate across the underlying “risk factors.”

Recognizing Your Behavioral Biases
Nudging Yourself to Better Investment Decisions

Multi-Factor Strategies

Multi-Factor Strategies

As investors seek to build diversified equity allocations with the objective of higher returns, they may consider multi-factor smart beta strategies, which offer the potential for attractive performance and increased diversification with lower fees than traditional active equity solutions.

Interest Rate Swaps

Interest Rate Swaps

Interest rate swaps have become an integral part of the fixed income market. These derivative contracts, which typically exchange – or swap – fixed-rate interest payments for floating-rate interest payments, are an essential tool for investors who use them in an effort to hedge, speculate, and manage risk.

Inflation-Linked Bonds (ILBs)

Inflation-Linked Bonds (ILBs)

Inflation-linked bonds, or ILBs, are securities designed to help protect investors from inflation. Primarily issued by sovereign governments, such as the U.S. and the UK, ILBs are indexed to inflation so that the principal and interest payments rise and fall with the rate of inflation. Inflation can significantly erode investors’ purchasing power, and ILBs can potentially provide protection from inflation’s effects. ILBs may also offer additional benefits in a broader portfolio context.

Inflation

Inflation

Inflation affects all aspects of the economy, from consumer spending, business investment and employment rates to government programs, tax policies, and interest rates. Understanding inflation is crucial to investing because inflation can reduce the value of investment returns.

How We Think Affects How We Invest

High Yield Bonds

High Yield Bonds

High yield bonds – defined as corporate bonds rated below BBB− or Baa3 by established credit rating agencies – can play an important role in many portfolios. They typically offer higher coupons than government bonds or high grade corporate bonds (or, corporates) and have the potential for price appreciation in the event of an improvement in the economy, or performance of the issuing company (of course, if these conditions worsen, then prices can also go down). Because the high yield sector generally has a low correlation to other sectors of the fixed income market along with less sensitivity to interest rate risk, an allocation to high yield bonds may provide portfolio diversification benefits. In addition, high yield bond investments have historically offered similar returns to equity markets, but with lower volatility.

The chart depicts examples of how hedging effectiveness varies depending on market scenario. It outlines most effective and least effective environment for correlation-based hedges (long Treasuries, trend following, alternative risk premia) and direct hedges (tail risk).

Duration

Duration

Most bond investors know that interest rate changes can affect the value of their fixed income holdings. How a bond or bond portfolio’s value is likely to be impacted by rising or falling rates is best measured by duration.

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PIMCO Highlights*

PIMCO is one of the world’s premier fixed income investment managers.


3,205+

Employees around the world

23

Global offices throughout the Americas, Europe and Asia

50+

Countries in which clients are based

940+

Global investment professionals

300+

Portfolio Managers with an average of 17 years of experience

300+

Investment professionals who have been at PIMCO for 10 years or more

80+

Global Credit Analysts

14

Sector Specialty Desks

105

Analytics/Asset Experts

Millions

Investors worldwide

$1.82 trillion

Assets under management

As of 30 June, 2022



* PIMCO manages $1.82 trillion in assets, including $1.45 trillion in third-party client assets as of 30 June 2022. Assets include $86.0 billion (as of 31 March 2022) in assets of clients contracted with Allianz Real Estate, affiliates and wholly-owned subsidiary of PIMCO and PIMCO Europe GmbH. Employee data excludes Allianz Real Estate employees.