PIMCO ETFs - Our Approach - Methodology

Our Approach

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Thought Leadership: As with every PIMCO investment product, our ETFs benefit from four decades of investment management experience and rigorous exploration of financial market opportunities, risks and macroeconomic trends. Whether in actively managed or index-tracking strategies, PIMCO's analytical strengths and favorable trade execution give our products essential advantages.

Analytical Risk Factor-Based Approach: Replicating fixed income indexes requires considerable expertise in security selection, risk factor analysis and portfolio management. It's our view that there's nothing "passive" about bond indexing because there can be thousands of bond issues in a given index, many of which may be thinly traded. Even an index that appears to be simple, such as a 1-3 Year U.S. Treasury index, may embed complexities. For example, there may be bonds in this type of index that were issued 27 years ago, and are therefore more difficult to source and trade. Because bond indexing is an inexact science, we rely on sophisticated analytical techniques to choose individual securities that collectively represent the primary risk attributes of the benchmark. This risk factor-based approach can more efficiently capture the return and risk profile of the index without concentrating risk exposures and without requiring expensive transactions to exactly recreate the stated index.

Risk Management: The question isn't whether you're willing to take risk, it's how well you're able to identify and manage it. PIMCO's risk management:

  • Is informed by our interaction and prominence in global financial markets
  • Identifies risk factors at both the sector level and the individual security level
  • Aims to monitor and control risk across the entire portfolio and within each of its components
  • Ensures that our trading partners are adequately capitalized
  • Meets the compliance and reporting standards of some of the largest and most demanding institutional clients in the world

The Right Strategy for the Right Vehicle: As a multi-vehicle manager, PIMCO is positioned to offer a full spectrum of investment strategies in the optimal vehicle for each. This gives us the flexibility to put our thought leadership and investment expertise first, without being limited by the requirements of any particular vehicle. For example, investment strategies for ETFs generally require highly liquid assets and transparent portfolios to facilitate efficient trading for ETF shares. Other vehicles may be more appropriate for strategies that invest in less liquid assets or require less portfolio transparency. PIMCO's full range of investment vehicles - ETFs, separate accounts, open-end and closed-end mutual funds, managed accounts, other commingled vehicles, etc. - ensures that we can deliver products that fit the broadest array of investor needs. For more information on the PIMCO strategies offered in non-ETF vehicles, please visit www.pimco.com

Innovation: Since pioneering active fixed income management in 1971, PIMCO has consistently created funds and investment strategies that meet the unique needs of demanding institutions. Our evolution as a provider of investment solutions continues, including the creation of ETFs as a new way for investors to tap into PIMCO's management expertise.

Execution: PIMCO's experience and size give us an edge in our execution capabilities by: 1) enabling what we feel are favorable trade execution terms with top-tier counterparties, 2) enforcing stringent collateral agreements and 3) aiming to trade at highly competitive securities prices. These advantages across global markets are essential to our ETF management, where efficient execution is a critical element of success.

 

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 or by clicking HERE. Please read the prospectus carefully before you invest or send money.

Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, and inflation risk; investments may be worth more or less than the original cost when redeemed. Certain U.S. Government securities are backed by the full faith of the 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.

Shares of the fund are not individually redeemable and shares may only be acquired from and redeemed by the fund in Creation Units. Investors may sell or purchase 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. Please see the prospectus for more details.

Exchange Traded Funds (“ETF”) are afforded certain exemptions from the Investment Company Act. The exemptions allow, among other things, for individual shares to trade on the secondary market. Individual shares cannot be directly purchased from or redeemed by the fund. Purchases and redemptions directly with Exchange Traded Funds are only accomplished through creation unit aggregations or “baskets ” of shares. 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. Investment policies, management fees and other information can be found in the individual ETF’s prospectus.

ETFs are subject to secondary market trading risks. Shares of the Fund will be listed for trading on an exchange, however, there can be no guarantee that an active trading market for such shares will develop or continue. There can be no guarantee that the Fund’s exchange listing or ability to trade its shares will continue or remain unchanged. Shares of the Fund may trade on an exchange at prices at, above or below their most recent NAV. The per share NAV of the Fund is calculated at the end of each business day, and fluctuates with changes in the market value of the Fund’s holdings. The trading prices of the Fund’s shares fluctuate continuously throughout the trading day based on market supply and demand, which may not correlate to NAV. The trading prices of the Fund’s shares may differ significantly from NAV during periods of market volatility, which may, among other factors, lead to the Fund’s shares trading at a premium or discount to NAV.