Strategies

PIMCO Absolute Return Strategy (PARS)

Strategy Overview
Many investors are searching for sources of additional return without systematic exposure to stock and bond markets and they are looking to investment managers with proven expertise, substantial risk management resources, and a time-tested investment process. Motivations to search for attractive absolute / excess returns include the desire to transport returns to other, more efficient markets as well as desires for superior standalone absolute return investments. PIMCO offers the “PARS” investment approach which we believe will appeal to investors searching for consistent, reliable sources of return / excess return.

PIMCO Absolute Return Strategy (PARS) is a unique and innovative investment approach that captures PIMCO’s investment process in a substantially unconstrained framework. PARS expands the traditional investment toolkit by using short derivatives and prudent amounts of leverage to express PIMCO’s investment ideas and isolate desired exposures from unwanted risks in an effort to exploit anomalies and capture value in global fixed income markets. Investors can select from four different PARS strategy variations that best meet their risk and return preferences.

PIMCO Absolute Return

Approach

Benefits of PARS

Bottom‑Up Sources of Value

PIMCO’s Absolute Return Experience

Risk Management / Controls

Sources of Return

Top‑Down Sources of Value

Disclosures

Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. Absolute return portfolios may not fully participate in strong positive market rallies. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. 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. Inflationlinked 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. 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. Income from municipal bonds may be subject to state and local taxes and at times the alternative minimum tax. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and while generally supported by a government, government-agency or private guarantor there is no assurance that the guarantor will meet its obligations. 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. Swaps are a type of derivative; while some swaps trade through a clearinghouse there is generally no central exchange or market for swap transactions and therefore they tend to be less liquid than exchange-traded instruments. There is no assurance when investing in short sales that the security necessary to cover a short position will be available. The use of leverage may cause a portfolio to liquidate positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause a portfolio to be more volatile than if the portfolio had not been leveraged. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. Diversification does not ensure against loss. Investors should consult their investment professional prior to making an investment decision.

Barclays Capital U.S. Aggregate Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis. LIBOR (London Interbank Offered Rate) is the rate banks charge each other for short-term Eurodollar loans. It is not possible to invest directly in an unmanaged index.

This material contains the current 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.