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PIMCO adopt a conservative approach to bond management with the emphasis on low volatility, preservation of capital and a number of small active positions with the aim of identifying long term value as opposed to market timing. The strategy prefers stable, transparent credits as opposed to fallen angel/recovery situations. In practice exposure to high yield is expected to vary between 35-5% according to the prevailing market conditions. The fund manager operates within a risk budget set by PIMCO’s global investment committee and the European strategy team, who will determine the optimal high yield/ investment grade allocation and the strategic themes running through the portfolio. All credit analysis is undertaken by PIMCO’s specialist fixed income teams. PIMCO expect 70% of the fund's out performance to be derived from bottom up credit analysis. The fund is benchmarked against 75% Merrill Lynch Non Gilt and 25% Merrill Lynch Euro High Yield Index targeting out performance of 1-1.25% p.a before fees over 3-5 years.