Diversified Income Fund

Why Diversified Income?

A one-stop credit solution that aims to deliver alpha in volatile times.

CAPTURE OPPORTUNITIES

Markets Are Volatile

Heightened volatility has created long-term opportunities across the credit spectrum. These can be captured by an experienced and flexible manager with deep analytical and research capabilities.

ENHANCE INCOME POTENTIAL

Interest Rates Have Increased

Access a compelling level of yield through a diversified, global portfolio. Active management of tactical opportunities has helped us deliver strong risk-adjusted returns for over 17 years.

REDUCE RISK

Uncertainty Is High

Diversification and caution are critical to reduce downside risk. Both approaches have been ingrained in this strategy right from the start.

Fund Stories

At PIMCO, we believe that combining a big picture view of the world with thorough asset-speciﬁc research is the best way to form a complete, independent view. This is especially needed in these times of heighted uncertainty. Here are a few fund stories from the last quarter.

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Supported by central banks globally and companies’ need for liquidity, credit markets saw record bond issuance during the quarter. We benefitted from significant new issue premia by buying in the primary market, with a focus on investment grade (IG); here we principally added to banks, utilities and technology. Within HY, we added to healthcare and media cable, given their defensive nature. Due to PIMCO’s leading position in the market many of the new issues were bought through reverse inquiries; here we managed to negotiate favorable covenants and anchor deals.

Banking It

We have been overweight financials throughout the quarter. The senior debt of core and peripheral European banks has driven IG alpha due to their fast recovery after the sharp dislocation in March. This recovery has been mostly fueled by the sector’s average higher capital levels and stronger asset quality, relative to previous downturns. Better fundamentals have also led the banking sector to become one of the vehicles that fiscal and monetary authorities have used to re-start economies around the world. This has made them the recipients of sizeable and quick support, as they have become part of the solution to the crisis, and not part of the problem, as they were in 2007-08.

Safe As Houses

Residential Mortgage-Backed Securities (RMBS) have benefitted from falling interest rates as well as strong fiscal and monetary support - especially from the U.S. Federal Reserve (Fed). We remain constructive on U.S. housing market fundamentals, which were already strong overall going into this crisis. Our MBS holdings have added alpha over the quarter, as we are largely invested in seasoned issues where borrowers have built considerable equity in their homes.

Insights

See More Insights

Investment Strategies

Income Strategy Update: Capitalizing on the Global Opportunities in Fixed Income

13.05.24

With the potential for higher-for-longer yields across countries, we see the global fixed income opportunity set as the most attractive in years.

Daniel J. Ivascyn, Esteban Burbano

Investment Strategies

Income Strategy Update: Compelling Yields Today, Potential Price Appreciation Tomorrow

20.02.24

Many investors remain in cash, but we think it’s time to shift exposure to bonds.

Daniel J. Ivascyn, Esteban Burbano

Investment Strategies

Income Strategy Update: Poised for Resilience and Potential Price Appreciation

09.11.23

We see meaningful value in high quality, more liquid bonds that offer compelling yields and potential price appreciation should the economy weaken.

Daniel J. Ivascyn, Alfred Murata, Joshua Anderson, Esteban Burbano

Investment Strategies

Income Strategy Update: Attractive Yields, Resilient Returns

07.08.23

We see compelling value in high quality, liquid fixed income assets that may offer potential resiliency if the economy weakens.

Daniel J. Ivascyn, Esteban Burbano

Investment Strategies

Income Strategy Update: Building Resilience and Harnessing Yield in High Quality Assets

18.05.23

Despite economic uncertainty, we see compelling value in high quality, liquid assets that we view as more resilient in the face of a potential recession.

Daniel J. Ivascyn, Esteban Burbano

Investment Strategies

Income Strategy Update: A New Bond Cycle Is Dawning

31.01.23

We believe fixed income markets offer higher yields and better valuations than in years, and we’ve positioned the Income portfolio to further benefit amid potential for volatility and a weakening economy.

Daniel J. Ivascyn, Esteban Burbano

Investment Strategies

Income Strategy Update: Balancing Opportunity With Resiliency

07.11.22

We believe fixed income markets now offer better value for active managers than they have in years.

Daniel J. Ivascyn, Esteban Burbano

Investment Strategies

PIMCO Income Strategy: Uncovering Opportunities for Investors Around the Globe

04.10.22

Since its inception, the PIMCO Income Strategy has aimed to deliver consistent income and attractive returns by being defensive in challenging markets and opportunistic when it matters – a strategy that has helped bring the benefits of our income expertise to millions of investors worldwide.

PIMCO

Investment Strategies

Income Strategy Update: Higher Yields, Wider Spreads, Greater Opportunities

16.08.22

The market contraction presents better opportunities than we’ve seen in years to generate income, which we balance against the need for resilience in the face of a potential recession.

Daniel J. Ivascyn, Esteban Burbano

Our Investment Management Team

The Diversified Income Fund's portfolio management team combines decades of expertise across alternative strategies and traditional asset classes. The team leverages the full depth and breadth of PIMCO’s global investment resources with the firm’s economic outlook, providing powerful context.

Daniel J. Ivascyn

Group Chief Investment Officer

Mr. Ivascyn is Group Chief Investment Officer and a managing director in the Newport Beach office. He is lead portfolio manager for the firm’s income, credit hedge fund, and mortgage opportunistic strategies, and is also a portfolio manager for total return strategies. He is a member of PIMCO's Executive Committee and a member of the Investment Committee. Morningstar named him Fixed-Income Fund Manager of the Year (U.S.) for 2013, and he was inducted into the Fixed Income Analysts Society Hall of Fame in 2019. Prior to joining PIMCO in 1998, he worked at Bear Stearns in the asset-backed securities group, as well as T. Rowe Price and Fidelity Investments. He has 32 years of investment experience and holds an MBA in analytic finance from the University of Chicago Graduate School of Business and a bachelor's degree in economics from Occidental College.

Expert

Alfred Murata

Portfolio Manager, Mortgage Credit

Mr. Murata is a managing director and portfolio manager in the Newport Beach office, managing income-oriented, multi-sector credit, opportunistic and securitized strategies. Morningstar named him Fixed-Income Fund Manager of the Year (U.S.) for 2013. Prior to joining PIMCO in 2001, he researched and implemented exotic equity and interest rate derivatives at Nikko Financial Technologies. He has 24 years of investment experience and holds a Ph.D. in engineering-economic systems and operations research from Stanford University. He also earned a J.D. from Stanford Law School and is a member of the State Bar of California.

Expert

Sonali Pier

Portfolio Manager, Multi-Sector Credit

Ms. Pier is a managing director and portfolio manager in the Newport Beach office, focusing on multi-sector credit opportunities. She is the lead portfolio manager for diversified income and is a senior member of the leveraged finance team. She is a member of the firm’s Americas Portfolio Committee, and previously she has served as a rotating member of the Investment Committee and the Executive Committee. Barron’s named her among the 100 Most Influential Women in U.S. Finance for 2024, and Morningstar named her winner of the 2021 U.S. Morningstar Award for Investing Excellence in the Rising Talent category. Prior to joining PIMCO in 2013, she was a senior credit trader at J.P. Morgan, trading cash, recovery, and credit default swaps across various sectors. She has 21 years of investment experience and holds an undergraduate degree in economics from Princeton University.

Expert

Charles Watford

Portfolio Manager

Mr. Watford is an executive vice president and portfolio manager in the London office, focusing on high yield and multi-sector credit opportunities. He is a member of the diversified income, high yield, and credit research teams. Prior to joining PIMCO in 2007, Mr. Watford was a management consultant at McKinsey & Company and an investment banking analyst at Morgan Stanley. He has 21 years of investment experience and holds an MBA from the Wharton School of the University of Pennsylvania. He also holds a master's degree in chemistry from the University of Oxford.

Expert

Regina Borromeo

Portfolio Manager

Ms. Borromeo is an executive vice president and portfolio manager in the London office and a senior member of PIMCO’s global credit team. She focuses on multi-sector credit as well as ESG-oriented credit and income strategies. She is a member of PIMCO’s ESG (environmental, social, and governance) portfolio management team and PIMCO PRIDE EMEA ERG Committee. Prior to joining PIMCO in 2022, Ms. Borromeo was a senior portfolio manager and director of global fixed income at Robeco UK Limited, overseeing investments across a variety of credit and ESG-oriented strategies. Prior to that, Ms. Borromeo was a portfolio manager and head of international high yield at Brandywine Global Investment Management (Europe). She also held roles at Morgan Stanley Investment Management as vice president, senior research analyst and portfolio manager, global fixed income, and at Goldman Sachs. She has 22 years of investment experience and holds a bachelor of arts from the University of Pennsylvania.

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Disclosures

MORNINGSTAR RATINGS

A rating is not a recommendation to buy, sell or hold a fund. © 2024 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. For more detailed information about Morningstar Rating, including its methodology, please go to: The Morningstar Rating Methodology.

GIS FUNDS

PIMCO Funds: Global Investors Series plc is an umbrella type open-ended investment company with variable capital and is incorporated with limited liability under the laws of Ireland with registered number 276928. The information is not for use within any country or with respect to any person(s) where such use could constitute a violation of the applicable law. The information contained in this communication is intended to supplement information contained in the prospectus for this Fund and must be read in conjunction therewith. Investors should consider the investment objectives, risks, charges and expenses of these Funds carefully before investing. This and other information is contained in the Fund's prospectus. Please read the prospectus carefully before you invest or send money. Past performance is not a guarantee or a reliable indicator of future results and no guarantee is being made that similar returns will be achieved in the future. Returns are net of fees and other expenses and include reinvestment of dividends. The performance data represents past performance and investment return and principal value will fluctuate so that the PIMCO GIS Funds shares, when redeemed, may be worth more or less than the original cost. Potential differences in performance figures are due to rounding. The Fund may invest in non-U.S. or non-Eurozone securities which involves potentially higher risks including non-U.S. or non-Euro currency fluctuations and political or economic uncertainty. For informational purposes only. Please note that not all Funds are registered for sale in every jurisdiction. Please contact PIMCO for more information. For additional information and/or a copy of the Fund's prospectus, please contact the Administrator: State Street Fund Services (Ireland) Limited, Telephone +353-1-776-0142, Fax +353-1-562-5517. © 2024.

ADDITIONAL INFORMATION/DOCUMENTATION

A Prospectus is available for PIMCO Funds and UCITS Key Investor Information Documents (KIIDs) (for UK investors) and Packaged retail and insurance-based investment products (PRIIPS) Key Information Document (KIDs) are available for each share class of each the sub-funds of the Company. The Company's Prospectus can be obtained from www.fundinfo.com and is available in English, French, German, Italian, Portuguese and Spanish.The KIIDs and KIDs can be obtained from www.fundinfo.com and are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the UCITS Directive).In addition, a summary of investor rights is available from www.pimco.com. The summary is available in English. The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. PIMCO Global Advisors (Ireland) Limited can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.

Past performance does not predict future returns.

Capital at risk. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and the current low interest rate environment increases this risk. Current reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Commodities contain heightened risk, including market, political, regulatory and natural conditions, and may not be suitable for all investors. Currency rates may fluctuate significantly over short periods of time and may reduce the returns of a portfolio. Derivatives may involve certain costs and risks, such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Investing in derivatives could lose more than the amount invested. Equities may decline in value due to both real and perceived general market, economic and industry conditions. Investing in foreign-denominated and/or -domiciled securities may involve heightened risk due to currency fluctuations, and economic and political risks, which may be enhanced in emerging markets. Sovereign securities are generally backed by the issuing government. Obligations of U.S. government agencies and authorities are supported by varying degrees, but are generally not backed by the full faith of the U.S. government. Portfolios that invest in such securities are not guaranteed and will fluctuate in value. High yield, lower-rated securities involve greater risk than higher-rated securities; portfolios that invest in them may be subject to greater levels of credit and liquidity risk than portfolios that do not. Mortgage- and asset-backed securities may be sensitive to changes in interest rates, subject to early repayment risk, and while generally supported by a government, government-agency or private guarantor, there is no assurance that the guarantor will meet its obligations. Income from municipal bonds may be subject to state and local taxes and at times the alternative minimum tax. Swaps are a type of derivative; swaps are increasingly subject to central clearing and exchange-trading. Swaps that are not centrally cleared and exchange-traded may be less liquid than exchange-traded instruments. Inflation-linked bonds (ILBs) issued by a government are fixed income securities whose principal value is periodically adjusted according to the rate of inflation; ILBs decline in value when real interest rates rise. Treasury Inflation-Protected Securities (TIPS) are ILBs issued by the U.S. government. Certain U.S. government securities are backed by the full faith of the government. Obligations of U.S. government agencies and authorities are supported by varying degrees but are generally not backed by the full faith of the U.S. government. Portfolios that invest in such securities are not guaranteed and will fluctuate in value.

The above narration contains the current opinions of the manager and such opinions are subject to change without notice. The above narration has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this presentation may be reproduced in any form, or referred to in any other publication, without express written permission.