PIMCO has launched the PIMCO GIS Global Advantage Real Return Fund offering investors the potential for enhanced after-inflation returns by combining the “beta” of an improved benchmark – the PIMCO Global Advantage ™ Inflation-Linked Bond Index (GLADI ILB) – with an active management strategy integrating PIMCO’s global economic outlook and the firm’s established expertise in evaluating inflation-linked bonds globally.
The fund is managed by Mihir Worah (pictured), managing director and head of the Real Return portfolio management team.
Reflecting the world’s evolving economic structure, the PIMCO GIS Global Advantage Real Return Fund uses an innovative GDP-weighted benchmark – GLADI ILB – to better align investors’ inflation-linked bond exposures with issuers’ growing capacity to meet their debt obligations and avoid the disadvantages of traditional indices based solely on market capitalisation weighting. A key characteristic of traditional market capitalisation-weighted indices is to overweight highly indebted countries with the largest stock of outstanding liabilities. By contrast, GLADI ILB bases country allocation on national income (GDP) and a country’s capacity to service its debt.
“In a rapidly evolving economic landscape where concerns about sovereign creditworthiness dominate, growth and inflation patterns diverge across regions and where central banks resort to unconventional measures, there is greater urgency for a strategy that can better capture real return investment opportunities and mitigate the risks of traditional indexing approaches,” says Worah.
The strategy’s benchmark provides a more responsive and comprehensive approach to inflation protection by including inflation-linked bonds issued by both developed and emerging market countries, which are chosen after applying liquidity and quality filters.
The fund has been added to PIMCO’s UCITS compliant Global Investor Series (GIS) fund range. This Dublin-registered range now comprises 43 sub-funds with £52 billion (EUR57 billion, USD83 billion) under management as of 30n June, 2011. 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 asset allocation and alternative solutions. The funds are accessible in a variety of share classes in different currencies, depending on client requirements.
PIMCO GIS Global Advantage Real Return Fund is available in institutional and retail share classes. The retail share classes are available through third-party distribution platforms and bank networks.