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Municipal Intermediate Value Managed Account

Overview

Investment Process

Utilizing our disciplined investment research process, PIMCO aims to uncover value and protect principal in clients’ municipal investment portfolios through comprehensive credit and quantitative research. Leveraging our quantitative research to calculate what we believe are more accurate valuations of non-standard (e.g., callable) security structures, we identify attractive investment opportunities. By way of holistic fundamental credit research, we also aim to select securities possessing underlying credit strength that may be misaligned with market perception, positioning us to capture alpha while mitigating downside risk.

Municipal Bond Philosophy

Taking a 360-degree view, we seek to maximize tax-efficient income and help preserve principal by investing in high quality municipal bonds. Our muni experts identify opportunities and potential risks in the municipal bond market using fundamental bottom-up analysis informed by PIMCO’s top-down global macroeconomic outlook. By applying institutional discipline to a muni market traditionally comprised of smaller investors, we believe our muni platform is distinctly positioned to capitalize on market inefficiencies to unlock potential in clients’ muni portfolios. Supported by our specialized team of muni SMA experts, our muni SMA clients may additionally benefit from our belief that individual clients should receive individualized service.

Portfolio Construction

This “enhanced ladder” strategy targets premium income by identifying attractive municipal bonds that others may have overlooked due to structural pricing inefficiencies. Intermediate Value separately managed accounts are comprised of high quality callable municipal bonds with maturities extending out to 15 years, with the remaining portion of the portfolio composed of investment grade 1 – 9 year municipal bullet bonds. The Municipal Intermediate Value strategy utilizes a proprietary interest rate and pricing model to provide what we believe are more accurate valuations of callable bonds, enabling the strategy to outperform a standard intermediate-term ladder without a significant increase in volatility. Through a disciplined, active sell approach when maturities fall below one year, Intermediate Value aims to deliver consistent outperformance relative to a hold to maturity strategy.

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