PIMCO Launches 1-5 Year TIPS ETF to Help Investors Preserve Purchasing Power
PRESS RELEASE
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Steven Vames
PIMCO - Media Relations
212-739-3598
PIMCO Launches 1-5 Year TIPS ETF to Help Investors Preserve Purchasing Power
Fund is First of a Trio of ETFs Designed to Help Protect Against Inflation Across a Range of Time Horizons
NEWPORT BEACH, CA (August 24, 2009) - PIMCO, a leading global investment management firm, has launched the PIMCO 1-5 Year U.S. TIPS Index Fund, a new way to access the firm's expertise in managing Treasury Inflation-Protected Securities (TIPS). The fund is the first in a lineup of three TIPS ETFs that PIMCO is launching to expand the range of products available to investors looking to protect against inflation. The funds will be managed by PIMCO Managing Director and Portfolio Manager Vineer Bhansali.
The PIMCO 1-5 Year U.S. TIPS Index Fund (Ticker: STPZ) is the first ETF to focus specifically on the short maturity segment of the TIPS market and aims to offer investors a high degree of protection against the immediate effects of inflation on their portfolio. Shorter-dated TIPS have historically shown a significantly higher correlation with current inflation and lower volatility relative to an index that covers the entire TIPS maturity spectrum. The fund's benchmark is the Merrill Lynch 1-5 Year US Inflation-Linked Treasury Index.
"Inflation-hedging should play a strategic role in investors' asset allocation, particularly as we head toward a ‘New Normal' where lower growth, increasing U.S. government debt and unprecedented fiscal stimulus could over time raise the potential for higher price pressures than have been seen in recent decades," said Mr. Bhansali.
Complete Solutions Provider
PIMCO is a premier provider of "real" or inflation-hedging investment solutions and has gained deep experience as one of the most active participants in the TIPS market since its inception in 1997.
"Our introduction of TIPS ETFs complements PIMCO's existing TIPS offerings, enabling us to extend our TIPS expertise to investors who prefer index strategies, or who prefer some of the unique attributes of ETFs," added Mr. Bhansali. "PIMCO's ETF platform is part of our firm's evolution as a complete provider of investment solutions for our clients."
In addition to providing explicit inflation protection and the potential for additional yield pick up, TIPS are U.S. Government-issued fixed-income securities that are backed by the full faith and credit of the U.S. government for timely payment of interest and principal. The principal value of TIPS is adjusted monthly according to the rate of inflation measured by the U.S. consumer price index.
In early September, PIMCO plans to launch two additional TIPS ETFs that aim to fill out the lineup of inflation-fighting investments. The PIMCO 15+ Year U.S. TIPS Index Fund (Ticker: LTPZ) will focus on long-dated TIPS that are effective in hedging long-term spending needs against interest rate and inflation risks. The PIMCO Broad U.S. TIPS Index Fund (Ticker: TIPZ) will give investors the combined benefits of TIPS exposure across the maturity spectrum.
About PIMCO
PIMCO, founded in 1971, is a global asset management firm that manages investments for an array of clients, including retirement and other assets that reach more than 8 million people in the U.S. and millions more around the world. Our clients include state, municipal and union pension and retirement plans whose beneficiaries come from all walks of life, from educators to healthcare workers to public safety employees. We have a substantial individual investor client base, and work in partnership with financial intermediaries such as Registered Investment Advisors, broker/dealers, trust banks and insurance companies. We are also advisors and asset managers to central banks, corporations, universities, foundations and endowments. With offices in North America, Europe, Asia and Australia, we manage investments across a full spectrum of global financial markets. PIMCO is owned by Allianz Global Investors, a subsidiary of the Munich-based Allianz Group, a leading global insurance company.
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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 or send money.
Shares of the Fund are not individually redeemable and may only be acquired from and redeemed to the Fund in Creation Units. Investors may buy or sell individual shares in secondary market transactions that do not involve the ETF. Shares of the Funds are bought and sold at market price (not NAV). Brokerage commissions will reduce returns. Investment policies, management fees and other information can be found in the individual ETF's prospectus.
An investment in an ETF involves risk, including the loss of principal. Investment return, price, yield, and NAV will fluctuate with changes in market conditions. Investments may be worth more or less than the original cost when redeemed. U.S. Government securities are backed by the full faith of the government; portfolios that invest in them are not guaranteed and will fluctuate in value. 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.
The value of most bond funds and fixed income securities are impacted by changes in interest rates. Bonds and bond funds with longer durations tend to be more sensitive and more volatile than securities with shorter durations; bond prices generally fall as interest rates rise.
The Merrill Lynch 1-5 Year US Inflation-Linked Treasury Index is an unmanaged index comprised of U.S. Treasury Inflation Protected Securities with a remaining term to final maturity less than 5 years and not less than 1 year. It is not possible to invest directly in an unmanaged index.
"Merrill Lynch" and "Merrill Lynch 1-5 Year US Inflation-Linked Treasury IndexSM" are reprinted with permission. © Copyright 2009 Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"). All rights reserved. "Merrill Lynch" and "Merrill Lynch 1-5 Year US Inflation-Linked Treasury In¬dexSM" are service marks of Merrill Lynch and have been licensed for use for certain purposes by the PIMCO 1-5 Year U.S. TIPS Index Fund that is based on the Merrill Lynch 1-5 Year US Inflation-Linked Treasury IndexSM, and is not sponsored, endorsed or promoted by Merrill Lynch and/or Merrill Lynch's affiliates nor is Merrill Lynch and/or Merrill Lynch's affiliates an adviser to the PIMCO 1-5 Year U.S. TIPS Index Fund. Merrill Lynch and Merrill Lynch's affiliates make no representation, express or implied, regarding the advisability of investing in this product or the Index and do not guarantee the quality, accuracy or completeness of the Index, Index Values or any Index related data included herein, provided herewith or derived therefrom and assume no liability in connection with their use. As the Index Provider, Merrill Lynch is licensing certain trademarks, the underlying Index and trade names which are composed by Merrill Lynch without regard to PIMCO, this product or any investor. Merrill Lynch and Merrill Lynch's affiliates do not provide investment advice to the PIMCO 1-5 Year U.S. TIPS Index Fund and are not responsible for the performance of the PIMCO 1-5 Year U.S. TIPS Index Fund.
Except for the historical information and discussions contained herein, statements contained in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the performance of financial markets, the investment performance of PIMCO's sponsored investment products and separately managed accounts, general economic conditions, future acquisitions, competitive conditions and government regulations, including changes in tax laws. Readers should carefully consider such factors. Further, such forward-looking statements speak only on the date at which such statements are made. PIMCO undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
The press release 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. Pacific Investment Management Company LLC. ©2009, PIMCO.
ETF shares are distributed by Allianz Global Investors Distributors LLC, 840 Newport Center Drive, Newport Beach, CA 92660, (888)-400-4383
