PIMCO Launches the PIMCO Flexible Credit Income Fund
ET | PIMCO Account Management
NEWPORT BEACH, Calif., Feb. 22, 2017 (GLOBE NEWSWIRE) — PIMCO, a leading global investment management firm, has launched the PIMCO Flexible Credit Income Fund, an interval fund that aims to generate attractive risk-adjusted returns and current income by investing across global credit sectors, including consumer, corporate, emerging market, mortgage and municipal bonds. The fund will be managed by a team of portfolio managers based in Newport Beach, New York and London.
The interval fund structure combines certain attributes of a closed end fund and a traditional mutual fund. As an unlisted closed-end fund, it looks to provide greater flexibility in targeting potentially higher returning, less liquid assets while offering the fund enhanced liquidity protection* should markets become stressed. The fund has greater flexibility to invest in illiquid securities and assets than open-end mutual funds.
Similar to a mutual fund, the fund is continuously offered. Additionally, investors can sell their shares back to the fund, although unlike the daily liquidity of a mutual fund, they may only be able to do so on a quarterly basis through repurchase offers (currently expected to be at 5% of outstanding shares).**
“In a low yielding environment, it is increasingly important to have the flexibility and resources to invest in both the public and private credit markets,” said Alfred Murata, Managing Director and Portfolio Manager. “We believe the flexibility of an interval fund structure allows investors to seek to capitalize on dislocations across global credit markets while remaining flexible to better navigate periods of short-term volatility.”
The PIMCO Flexible Credit Income Fund is the firm’s first interval fund. The structure expands access to our flexible, opportunistic credit capabilities that PIMCO already deploys in our private credit vehicles.
Mr. Murata; Dan Ivascyn, Managing Director and Group Chief Investment Officer; Mark Kiesel, Managing Director and Chief Investment Officer of Global Credit; Marc Seidner, Managing Director and Chief Investment Officer of Non-traditional Strategies; Christian Stracke, Managing Director and Global Head of Credit Research; and Eve Tournier, Executive Vice President and Head of European Credit Portfolio Management, are jointly and primarily responsible for day-to-day management of the fund.
PIMCO is a leading global investment management firm, with offices in 11 countries throughout North America, Europe and Asia. Founded in 1971, PIMCO offers a wide range of innovative solutions to help millions of investors worldwide meet their needs. Our goal is to provide attractive returns while maintaining a strong culture of risk management and long-term discipline. PIMCO is owned by Allianz S.E., a leading global diversified financial services provider.
*Liquidity protection refers to the fact that the fund is not subject to the more restrictive liquidity requirements of an open-end registered investment company. It is not meant to suggest that the fund is a liquid investment. Investors should consider shares of the fund to be an illiquid investment.
**A 2% repurchase fee on shares accepted for repurchase by the Fund that have been held for less than one year.
Investors should consider the investment objectives, risks, charges and expenses of the funds carefully before investing. This and other information are contained in the fund’s prospectus, which may be obtained by contacting your investment professional or PIMCO representative or by visiting www.pimco.com. Please read the prospectus carefully before you invest or send money.
The fund is an unlisted closed-end “interval fund.” Limited liquidity is provided to shareholders only through the fund’s quarterly offers to repurchase between 5% to 25% (currently expected to be 5%) of its outstanding shares at net asset value. There is no secondary market for the fund’s shares and none is expected to develop. Investors should consider shares of the fund to be an illiquid investment.
It is important to note that differences exist between the fund’s daily internal accounting records, the fund’s financial statements prepared in accordance with U.S. GAAP, and recordkeeping practices under income tax regulations. It is possible that the fund may not issue a Section 19 Notice in situations where the fund’s financial statements prepared later and in accordance with U.S. GAAP or the final tax character of those distributions might later report that the sources of those distributions included capital gains and/or a return of capital. Please see the fund’s most recent shareholder report for more details.
The fund’s distribution rate may be affected by numerous factors, including changes in realized and projected market returns, fund performance, and other factors. There can be no assurance that a change in market conditions or other factors will not result in a change in the fund distribution rate at a future time.
A word about 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. 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. Mortgage-related assets and other asset-backed instruments may be sensitive to changes in interest rates, subject to early repayment risk, and their value may fluctuate in response to the market’s perception of issuer creditworthiness; while generally supported by some form of government or private guarantee, there is no assurance that private guarantors will meet their obligations. 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. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Bank loans are often less liquid than other types of debt instruments and general market and financial conditions may affect the prepayment of bank loans, as such the prepayments cannot be predicted with accuracy. There is no assurance that the liquidation of any collateral from a secured bank loan would satisfy the borrower’s obligation, or that such collateral could be liquidated. Investments in distressed loans and bankrupt companies are speculative and the repayment of default obligations contains significant uncertainties. The value of real estate and portfolios that invest in real estate may fluctuate due to: losses from casualty or condemnation, changes in local and general economic conditions, supply and demand, interest rates, property tax rates, regulatory limitations on rents, zoning laws, and operating expenses. 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. The use of leverage may cause a portfolio to liquidate positions when it may not be advantageous to do so to satisfy its obligations or to meet segregation requirements. Leverage, including borrowing, may cause a portfolio to be more volatile than if the portfolio had not been leveraged. An investment in an interval fund is not suitable for all investors. Unlike typical closed-end funds an interval fund’s shares are not typically listed on a stock exchange. Although interval funds provide limited liquidity to investors by offering to repurchase a limited amount of shares on a periodic basis, investors should consider shares of the Fund to be an illiquid investment. Investments in interval funds are therefore subject to liquidity risk as an investor may not be able to sell the shares at an advantageous time or price. There is also no secondary market for the Fund’s shares and none is expected to develop. There is no guarantee that an investor will be able to tender all or any of their requested Fund shares in a periodic repurchase offer.
There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest for a long term, especially during periods of downturn in the market. Investors should consult their investment professional prior to making an investment decision.
Except for the historical information and discussions contained herein, statements contained in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the performance of financial markets, the investment performance of PIMCO’s sponsored investment products and separately managed accounts, general economic conditions, future acquisitions, competitive conditions and government regulations, including changes in tax laws. Readers should carefully consider such factors. Further, such forward-looking statements speak only on the date at which such statements are made. PIMCO undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
This material contains the current opinions of the manager and such opinions are subject to change without notice. This material 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 material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2017, PIMCO
PIMCO Investments LLC, distributor, 1633 Broadway, New York, NY 10019, is a company of PIMCO.
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