Pimco has launched the Pimco GIS Emerging Markets 2018 Fund, a diversified fixed income portfolio which aims to provide investors with higher returns from emerging markets in a low-rate environment while managing volatility and interest rate risk. The fund will be managed by Francesc Balcells, executive vice president and portfolio manager at Pimco.
The Pimco GIS Emerging Markets 2018 aims to provide exposure to attractive yield levels available in hard currency-denominated emerging market sovereigns and corporates; however, unlike traditional benchmark-oriented strategies, the fund does it in the format that has a defined maturity, which is much shorter than the average maturity of instruments in comparable traditional benchmarks. Although investors have been drawn to higher yields in emerging markets, market volatility often prevents them from allocating to this asset class.
If held until maturity of four years, investors may potentially earn a more predictable rate of return by investing in the Pimco GIS Emerging Markets 2018 Fund. Balcells’ active management efforts are expected to be particularly focused on the security selection at the portfolio construction stage, managing the carry to stay on track to realise the initial return estimate (YTM) and to the ongoing monitoring of credits to avoid credit events and capital impairment.
“The fixed maturity is a relatively unknown but rapidly growing segment of the bond fund market in Europe. The Pimco GIS Emerging Markets 2018 Fund seeks to provide investors with higher returns in The New Neutral world of generally suppressed yields, but it does so while addressing key concerns of volatility and long duration of the asset class,” Balcells said.
“Pimco has been monitoring the development of emerging economies since the late 1980s and started investing tactically in the early 1990s. Our size and breadth in this space places the investment team in the forefront of information flows, thereby supplementing the robust and timely understanding of the market dynamics so crucial to investing in emerging markets.
The fund has been added to Pimco’s Ucits compliant Global Investor Series (GIS) fund range. This Dublin-registered range now comprises 50 sub-funds with $116.1bn under management as of 30 September 2014. With daily liquidity, investors can gain exposure to a broad range of asset classes, from the more traditional global and regional core fixed income funds, through credit portfolios, to expanding equity, asset allocation and alternative solutions. The funds are accessible in a variety of share classes in different currencies, depending on client requirements.
The Pimco GIS Emerging Markets 2018 fund will be available to investors in institutional, administrative and retail share classes in various currency-hedged versions.