What is Diversified Income? Diversified Income is a multi-sector strategy that invests across a broad spectrum of credit market sectors including global corporate credit both investment grade and high yield, and emerging market debt. The ability to invest globally helps to improve diversification and may allow investors to benefit from differences in business cycles across regions and credit quality trends across credit sectors.
This process provides the framework for the regional and sector analyses that are integral to the investment decisions within the Diversified Income strategy, and that are executed by specialists based on comprehensive bottom-up analysis. Investment grade, high yield and emerging markets specialist portfolio managers are responsible for designing the bottom-up investment strategies. The specialist teams from each global office identify the optimal means of gaining exposure within their sectors and are responsible for efficient local execution.
This strategy allows investors to make the strategic decision to invest across the broad spectrum of global credit sectors while placing the tactical sector, country, industry and issuer decisions with PIMCO, thereby optimizing credit market exposure amid changing economic and market environments. Diversified Income differs from typical fixed income strategies where returns tend to be driven mainly by changes in interest rates within developed markets.
As such, this strategy may serve as both a complement to a traditional fixed income portfolio or as a replacement for stand-alone allocations to individual segments of the global credit market.
Specifically, the philosophy for investing in global corporate and sovereign credit markets embodies four key principles:. This is not an offer of securities to any person in any jurisdiction where it is unlawful or unauthorized. PIMCO provides services only to qualified institutions and investors. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.
You are currently running an old version of IE, please upgrade for better performance. Home Strategies Diversified Income. Specifically, the philosophy for investing in global corporate and sovereign credit markets embodies four key principles: The assessment of the direction of global economic growth and interest rates provides important insight in choosing the optimal portfolio structure and sector allocation within this strategy. We place a great deal of importance on independent analysis when evaluating corporate and emerging market credits.
We never rely on rating agencies alone. Our staff of seasoned credit analysts rates every credit that we hold. Our research is focused on issuers with improving credit profiles and prospects for rating upgrades and, therefore, greater capital appreciation potential.
A prerequisite to our evaluating an issuer is access to management. We concentrate on issuers with strong underlying businesses and competitive positions. Those results are augmented with an analysis of the potential impact of the external economic environment and technical conditions on each country. If a country does not meet our credit criteria, then we will avoid it and seek alternative methods to manage tracking error. Industry Analysis — Industry analysis represents another important aspect of the bond selection process.
The credit analysts and portfolio managers work together to identify industries that are undergoing structural or competitive changes that may enhance profits and cash flow. Company Analysis — Fundamental, company-specific credit analysis forms the most critical stage of our corporate credit research process.
The team of credit analysts is organized by industry in order to facilitate company evaluation across regions providing for the identification of relative value opportunities globally. Issue Analysis — PIMCO portfolio managers and credit analysts further compare all of the available issues for a given issuer to select the security that offers the best value. This analysis focuses on the valuation of each issue relative to its specific features, such as currency of issue, call risk, seniority within the capital structure, and covenants.
On the qualitative side, the portfolio management teams and credit analysts within each sector perform regular company and country visits and assign an internal rating to every credit in which PIMCO invests. In addition, the specialist teams follow a rigorous, formalized process of monitoring daily developments and updating those internal ratings as necessary. On the quantitative side, PIMCO has invested considerable resources in developing proprietary analytical risk management systems.
These tools are important in managing multi-sector strategies as they allow various types of risks to be analyzed at the portfolio, sector and instrument level.
Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value. Investing in the bond market is subject to certain risks including market, interest-rate, issuer, credit, and inflation risk. 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.
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. There is no guarantee that these investment strategies will work under all market conditions or is 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. 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. Are you sure you would like to leave?
Global fixed income markets provide a rich opportunity set to an experienced manager capable of identifying and implementing both top-down and bottom-up investment strategies.
PIMCO uses a matrix approach to managing credit risk that is based on both qualitative and quantitative measures.More...