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Strategy Overview

Highlights

  • Aims to achieve high real returns (returns above inflation) consistent with its benchmark of CPI +5% over a full market cycle
  • Focuses on “third pillar” assets – those with a low correlation to traditional first- (developed market stocks) and second-pillar (U.S. core bonds) asset classes – may enhance investors’ return potential
  • Offers broader diversification and inflation protection potential than a traditional portfolio of just stocks, bonds and cash
  • Benefits from PIMCO’s time-tested investment process and active management experience across asset classes
  • Managed by PIMCO, one of the country’s top investment management firms, and sub-advised by Research Affiliates, an expert in innovative asset allocation strategies and market research

 

Process & Philosophy

 

All Asset Philosophy

All Asset Managed Account portfolios can access the full spectrum of actively managed PIMCO open-end mutual funds and ETFs – a global opportunity set that includes developed and emerging market stocks and bonds, liquid alternative investments and inflation-related assets. The strategy seeks high long-term real returns through a value-oriented, contrarian asset allocation approach – emphasizing asset classes with fundamentally attractive (low) valuations and rotating out of positions that have gained and risk being overvalued. By actively allocating in this manner across a wide variety of asset classes, the strategy offers investors a diversifying investment approach as compared to traditional stock/bond-centric portfolios.

Investment Process

All Asset Managed Account delivers two levels of expert management:

The strategy’s opportunity set consists solely of underlying funds managed by our portfolio managers at PIMCO. We pursue attractive risk-adjusted returns and “alpha,” or excess returns, while seeking to manage risk. Our investment process is anchored by our belief that a disciplined focus on long-term fundamentals provides an important economic backdrop against which we identify opportunities and risk, and implement long-term investment strategies. This top-down approach is supported by the bottom-up expertise of more than 50 global credit research analysts.

Asset allocation is managed by the fund’s subadvisor, Research Affiliates, LLC.

Founded by Rob Arnott in 2002, Research Affiliates is a global leader in research-driven asset allocation strategies with more than 50 investment professionals.

Portfolio Construction

In determining the strategy’s allocation, Rob Arnott and his expert team employ a disciplined, model-driven process that relies on a number of essential building blocks, including the long-term real return potential of each asset class, equity and bond risk premiums and proprietary active asset allocation models. Key members of Research Affiliates’ team meet at least monthly with investment professionals from PIMCO to review the portfolio allocations from a qualitative perspective in order to consider potentially important macroeconomic factors that would be missed by a purely model-driven, quantitative investment process.

Managers

Robert Arnott

Mr. Arnott is the founder and chairman of Research Affiliates, a subadvisor to PIMCO. In 2002, he established Research Affiliates as a research-intensive asset management firm that focuses on innovative asset allocation and alternative indexation products. He previously served as chairman of First Quadrant, as president of TSA Capital Management (now part of Analytic Investors), and as vice president at The Boston Company. He also was global equity strategist at Salomon Brothers. He has published more than 100 articles in journals such as the Journal of Portfolio Management, the Harvard Business Review and the Financial Analysts Journal, where he also served as editor in chief from 2002 through 2006. He graduated summa cum laude from the University of California, Santa Barbara, in 1977 in economics, applied mathematics and computer science.

The managed account strategies described in this material are offered by Pacific Investment Management Company LLC and are available exclusively through financial professionals. Managed accounts have a minimum asset level and may not be suitable for all investors. Financial professionals seeking more information should contact their managed accounts department or call their PIMCO representative.

PIMCO All Asset Managed Account strategy consists of an asset allocation model licensed to investment professionals. The model invests in PIMCO mutual funds and ETFs and is updated monthly. These vehicles are available by prospectus only.

Past performance is not a guarantee or a reliable indicator of future results. Individual results may vary as a result of market conditions, trading costs and other factors, which may be unique to each account. Individual account holdings will vary depending on the size of an account, cash flows and account restrictions. Implementing manager may or may not implement the model as provided. Portfolio holdings are subject to change without notice. At any time an individual account managed in this strategy may or may not include securities held by another portfolio. Consequently, any particular account may have portfolio characteristics and performance that differ from another individual account following this strategy.

A word about risk:
The managed account invests in other PIMCO funds and performance is subject to underlying investment weightings, which will vary. 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. Commodities contain heightened risk including market, political, regulatory and natural conditions, and may not be suitable for all investors. Mortgage and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee, there is no assurance that private guarantors will meet their obligations. 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. Investing in securities of smaller companies tends to be more volatile and less liquid than securities of larger companies. 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. Equities may decline in value due to both real and perceived general market, economic and industry conditions. Derivatives and commodity-linked 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. Commodity-linked derivative instruments may involve additional costs and risks such as changes in commodity index volatility or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Investing in derivatives could lose more than the amount invested.

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.

No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO and YOUR GLOBAL INVESTMENT AUTHORITY are trademarks or registered trademarks of Allianz Asset Management of America L.P. and Pacific Investment Management Company LLC, respectively, in the United States and throughout the world. © 2015 PIMCO