Fund Rationale: PIMCO GIS Low Duration Income Fund

PIMCO GIS Low Duration Income Fund
SGD H Institutional Accumulation share class (ISIN: IE00BMY4TJ39)
Fund Manager Page 
(note this is for the E share class)

Introductory information
The PIMCO GIS Low Duration Income Fund (the "Fund”) seeks attractive income, consistent with prudent investment management. Long-term capital appreciation is a secondary objective. The Low Duration Income Fund is a portfolio that is actively managed and utilises a broad range of fixed income securities to seek to deliver attractive income while maintaining relatively low interest rate exposure, with a secondary goal of capital appreciation. The fund aims to achieve this by employing PIMCO’s best income-generating ideas across global fixed income sectors with a focus on risk factor diversification.

The Fund is benchmarked against the Bloomberg Barclays U.S. Aggregate 1-3 Years Index (SGD Hedged), and is suitable for investors who are looking for 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, and have a medium-term investment horizon over the medium to long term.

As of September 2020, the Fund managed a total asset of USD 890m.

Characteristics
The Fund will seek to maintain an attractive level of income by investing in a broad array of fixed income sectors which in the Investment Advisor’s view typically generate elevated levels of income.  The average portfolio duration of the Fund will normally vary from 0 to 3 years, and The Fund may invest in both investment grade securities and high yield securities (up to 30%). The Fund may invest up to 15% of its total assets in Fixed Income Instruments that are economically tied to emerging market countries.

As of August 2020, the Fund has most of its allocations to US government related debt instruments, securitised assets, and investment grade credit. Its top 5 industry allocation is 14.1% in Banks, 6.6% in Technology, 3% in Electric Utility, 2.7% in Health Care and 1.9% in Wireless. It has an effective duration of 1.7 years and average credit quality of A. It’s current yield is 2.93% and its annualised distribution yield is 2.55%.

Background information and cost
The Fund has a unified all-in management fee of 55bps per annum (0.55% p.a.). Endowus do 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 PIMCO are 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 have selected the PIMCO GIS Low Duration Income Fund because of its diversification across multiple sectors of the bond market, its strong record over the long term that outperformed the benchmark and most of its peers, and its experienced management team. The global economic landscape is constantly changing, causing different bond sectors to go in and out of favour. The Fund’s multi-sector approach allows it to seek out income-generating ideas in any market climate, targeting multiple sources of income and low interest rate exposure from a global opportunity set. In addition, while generating attractive current income is a primary goal, the Fund also seeks long-term capital appreciation and compelling risk-adjusted returns with a low duration level. PIMCO has actually been managing this strategy since 2004 in its US mutual fund vehicle available to US investors, and over the past 10 years, its US mutual fund realised an annualised return of 3.77% compared to 1.62% (total return with distributions reinvested) from the benchmark, as of June 2020. This performance is ranked number 2 across all the peers in the Short Investment Grade Debt Funds category.

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.