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Fund Rationale: PIMCO GIS Income Fund

PIMCO GIS Income Fund
SGD Institutional Class Income Shares (ISIN: IE00BSTL7535)
SGD Hedged Institutional Accumulation Shares (ISIN: IE00BMB3HX34)

Introductory information
The PIMCO GIS Income Fund is a portfolio that is actively managed and utilizes a broad range of fixed income securities that seek to produce an attractive level of income while maintaining a relatively low risk profile, with a secondary goal of capital appreciation. The fund taps into multiple areas of the global bond market, and employs PIMCO’s vast analytical capabilities and sector expertise to help temper the risks of high income investing.

The Fund is benchmarked against Bloomberg Barclays U.S Aggregate (SGD Hedged) Index, and is suitable for investors who are looking for a competitive and consistent level of income without compromising long term capital appreciation; are looking for a diversified exposure to global fixed income markets and are willing to accept the risks and volatility associated with investing in such markets, including emerging markets and non investment grade securities; and have an investment horizon over the medium to long term.

The Fund’s oldest share class was incepted on 30 Nov 2012, while the SGD Hedged Institutional Accumulation Shares were launched on 14 July 2020. As of September  2020, the Fund managed a total asset of USD 69 bn.

Characteristics
The Fund will generally allocate its assets among several investment sectors, which may include (i) high yield (maximum 50%) and investment grade corporate bonds of issuers located in the EU and in non-EU countries, including emerging market countries (maximum 20%); (ii) global bonds and Fixed Income Securities issued by EU and non-EU governments, their agencies and instrumentalities; (iii) mortgage-related and other asset-backed securities which may or may not be leveraged; and (iv) foreign currency positions, including currencies of emerging market countries. The Fund’s exposure to convertible bonds is limited to 25% and to equity securities is limited to 10%. The Fund many use derivative instruments for hedging purposes and/or for investment purposes and/or for efficient portfolio management. 

As of Aug 2020, the Fund has an effective duration of 2.22 Yrs and a current yield of 3.58%. Its top sector allocations, in terms of duration in years, include 1.61 years to securitised assets, 1.40 years to investment grade credit. 0.31 years to high yield credit, 0.59 years to emerging markets and -1.76 to government related securities (short positions). Its top industry sector allocations are: 18.47% in banks, 2.67% in electric utility, and other sectors including technology, financial, healthcare, and etc.

Background information and cost
The Fund has a unified all-in management fee of 55 bps per annum (0.55% p.a.). Endowus is able to provide its clients access to its institutional Share Class, which is a clean share class with no trailer fees. Endowus does not charge a preliminary sales charge or any other fees, other than the all-in advice fee. 

PIMCO is one of the world’s premier fixed income investment managers. Since their founding in 1971 in California, they have continued to bring innovation and expertise to their partnership with clients seeking the best investment solutions. Today PIMCO’s  professionals work in 17 offices across the globe, united by a single purpose: creating opportunities for investors in every environment.

Selection criteria for Endowus
Endowus has selected the PIMCO GIS Income Fund because of its strong management team and its superior long returns relative to its peers with modest volatility. In addition, the ability to access the Fund’s institutional share class makes it a more worthwhile choice for those looking for diversified exposure of global fixed income with a focus on income generation. The management team have leveraged Pimco’s bountiful--and growing--human and analytical resources, including mortgage and real estate specialists, and newer staff focused on special credit situations, and the strategy has posted long-term returns among the category’s (Global Flexible Bond Morningstar category) best with modest volatility. As of Aug 31, the Fund’s oldest share class has a since inception annualised return of 5.2% compared to an average of 3.15% annualised return by its peers over the same period. The Funds trailing 3 years volatility is 5.81% as of Aug 31.

Updated by Endowus: 25 Sept 2020

** Disclaimer
Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.

The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.